CBIZ REPORTS FIRST-QUARTER 2023 RESULTS

Rhea-AI Summary

CBIZ, a leader in financial services, reported strong first-quarter results for 2023, with total revenue reaching $454.6 million, marking a 16.1% increase year-over-year. Same-unit revenue rose 10.0%, contributing significantly to growth, alongside $23.6 million from acquired operations. Net income surged 25.9% to $73.2 million, while adjusted earnings per share climbed 23.7% to $1.46. The company repurchased 0.4 million shares in the quarter and an additional 0.2 million shares post-quarter, maintaining a healthy financial position with $190 million in unused borrowing capacity. CBIZ anticipates revenue growth of 8% to 10% for the full year, despite an expected rise in the effective tax rate.

Positive

• Total revenue increased by 16.1% to $454.6 million.
• Same-unit revenue grew by 10.0%, contributing to overall growth.
• Net income rose 25.9% to $73.2 million.
• Adjusted earnings per share increased by 23.7% to $1.46.
• Company repurchased approximately 0.6 million shares, enhancing shareholder value.

Negative

• Expected increase in effective tax rate from 25.5% to 28%, impacting earnings.

FIRST-QUARTER HIGHLIGHTS: 

• TOTAL REVENUE UP 16.1%; SAME-UNIT REVENUE UP 10.0%
• GAAP EPS UP 30.9%; ADJUSTED EPS UP 23.7%
• NET INCOME UP 25.9%; ADJUSTED EBITDA UP 22.0%

CLEVELAND, April 27, 2023 /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, 2023.

For the 2023 first quarter, CBIZ recorded revenue of $454.6 million, an increase of $62.9 million, or 16.1%, compared with $391.7 million reported for the same period in 2022. Acquired operations, net of divestitures, contributed $23.6 million, or 6.1%, to revenue growth. Same-unit revenue increased by $39.3 million, or 10.0%, for the quarter, compared with the same period a year ago. Net income was $73.2 million, or $1.44 per diluted share, compared with $58.1 million, or $1.10 per diluted share, for the same period a year ago.

Excluding non-recurring transaction and first-year integration expenses related to the acquisition of Marks Paneth in January 2022, and expenses related to the acquisition of Somerset in February 2023, Adjusted net income was $74.3 million in the first quarter of 2023 compared with Adjusted net income of $62.6 million for the same period a year ago. Adjusted earnings per share was $1.46, an increase of 23.7% compared with Adjusted earnings per share of $1.18 for the same period a year ago. Adjusted EBITDA for the first quarter was $113.3 million, up 22.0% compared with $92.9 million for the same period in 2022.

Schedules reconciling Adjusted net income, Adjusted earnings per share and Adjusted EBITDA to the most directly comparable GAAP measures can be found in the tables included in this release.

During the three months ended March 31, 2023, the Company repurchased approximately 0.4 million shares of its common stock on the open market. Between April 1, 2023 and April 26, 2023, the Company repurchased an additional 0.2 million shares. The balance outstanding on the Company's unsecured credit facility on March 31, 2023, was $403.7 million with $190.0 million of unused borrowing capacity.

Jerry Grisko, CBIZ President and Chief Executive Officer, said, "With same unit revenue up 10.0% and total revenue up 16.1%, we are pleased that our strong performance in 2022 has continued into the first quarter of 2023. With this encouraging start to our year, we would expect our full-year results to come in at the high-end of the guidance that we provided in February of this year."

"We are also pleased to bring another outstanding accounting firm to our CBIZ team with the acquisition of the non-attest assets of Somerset CPAs and Advisors which closed effective February 1 of this year. Although they have only been with us for a short time, Somerset is performing in line with expectations and was a meaningful contributor to strong first quarter results. We continue to have a healthy pipeline of acquisition candidates and access to sufficient funds to pursue those opportunities," Grisko concluded.

2023 Outlook

• The Company expects revenue to grow within a range of 8% to 10% over the prior year.
• The Company expects an effective tax rate of approximately 28%. The increased rate, up from 25.5% in 2022, will impact diluted earnings per share by approximately $0.08.
• The Company expects a weighted average fully diluted share count of approximately 50.5 to 51.0 million shares.
• The Company expects GAAP fully diluted earnings per share to grow within a range of 15% to 17%, to $2.31 to $2.36 per share over the $2.01 per share reported for 2022.
• The Company expects Adjusted fully diluted earnings per share to grow within a range of 11% to 13%, to $2.36 to $2.41 per share over the Adjusted earnings per share of $2.13 per share reported for 2022.

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/10177806/f911fa5dfc.

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 120 offices in 33 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 risk that the anticipated benefits and perceived advantages of an acquisition may not be achieved; the impact of COVID-19 or governmental rules related to public health issues on the Company's business, operations and clients; the Company's ability to adequately manage and sustain its growth; the Company's dependence on the trend of outsourcing business services; the Company's dependence on the services of its CEO, other key employees, producers and service personnel; the effects of any potential cyber-attacks; competitive pricing pressures; general business and economic conditions; and changes in governmental laws or regulation affecting the Company's clients, business, business services operations, or business models. 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, 2023 AND 2022 (In thousands, except percentages and per share data)
		Three Months Ended March 31,
		2023		%		2022		%
Revenue		$ 454,606		100.0 %		$ 391,722		100.0 %
Operating expenses (1)		341,011		75.0		290,299		74.1
Gross margin		113,595		25.0		101,423		25.9
Corporate general and administrative expenses (1)		15,598		3.4		16,309		4.2
Operating income		97,997		21.6		85,114		21.7
Other income (expense):
Interest expense		(3,641)		(0.8)		(1,259)		(0.3)
Gain on sale of operations, net		99		—		—		—
Other income (expense), net (1) (2)		5,112		1.1		(6,407)		(1.6)
Total other income (expense), net		1,570		0.3		(7,666)		(1.9)
Income before income tax expense		99,567		21.9		77,448		19.8
Income tax expense		26,407				19,321
Net income		$  73,160		16.1 %		$  58,127		14.8 %
Diluted earnings per share		$      1.44				$      1.10
Diluted weighted average common shares outstanding		50,762				52,955
Other data:
Adjusted EBITDA (3)		$ 113,348				$  92,892
Adjusted EPS (3)		$      1.46				$      1.18
(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 income (expense), net." The deferred compensation       plan has no impact on "Income before income tax expense."
Income and expenses related to the deferred compensation plan for the three months ended March 31, 2023, and 2022 are as follows (in thousands):
		Three Months Ended March 31,
		2023		% of Revenue		2022		% of Revenue
Operating expenses (income)		$       4,760		1.0 %		$     (5,667)		(1.4) %
Corporate general and administrative expense (income)		642		0.1 %		(811)		(0.2) %
Other income (expense), net		5,402		1.2 %		(6,478)		(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, 2023, and 2022 are as follows (in thousands):
	Three Months Ended March 31,
	2023								2022
	As Reported		Deferred Compensation Plan		Adjusted		% of Revenue		As Reported		Deferred Compensation Plan		Adjusted		% of Revenue
Gross margin	$ 113,595		$       4,760		$ 118,355		26.0 %		$ 101,423		$      (5,667)		$  95,756		24.4 %
Operating income	97,997		5,402		103,399		22.7 %		85,114		(6,478)		78,636		20.1 %
Other income (expense), net	5,112		(5,402)		(290)		(0.1) %		(6,407)		6,478		71		— %
Income before income tax expense	99,567		—		99,567		21.9 %		77,448		—		77,448		19.8 %
(2)  Included in "Other income (expense), net" for the three months ended March 31, 2023 and 2022, is expense of $0.6 million and $0.6 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 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,
												2023		2022
Revenue
Financial Services												$            343,086		$            288,746
Benefits and Insurance Services												100,054		92,486
National Practices												11,466		10,490
Total												$            454,606		$            391,722
Gross Margin
Financial Services												$              98,643		$              78,946
Benefits and Insurance Services												23,131		19,829
National Practices												883		914
Operating expenses - unallocated (1):
Other expense												(4,302)		(3,933)
Deferred compensation												(4,760)		5,667
Total												$            113,595		$            101,423

(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 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 (income) in "Operating expenses" and "Corporate, general and administrative expenses,"            and offset in "Other income (expense), net."

 

CBIZ, INC. SELECT CASH FLOW DATA (UNAUDITED) (In thousands)
		Three Months Ended March 31,
		2023		2022
Net income		$         73,160		$         58,127
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization expense		8,625		8,173
Gain on sale of operations, net		(99)		—
Bad debt expense, net of recoveries		461		549
Adjustments to contingent earnout liability, net		630		642
Stock-based compensation expense		3,831		3,689
Other noncash adjustments		2,749		2,992
Net income, after adjustments to reconcile net income to net cash provided by operating activities		89,357		74,172
Changes in assets and liabilities, net of acquisitions and divestitures		(133,868)		(125,062)
Net cash used in operating activities		(44,511)		(50,890)
Net cash used in investing activities		(45,896)		(81,531)
Net cash provided by financing activities		61,778		170,446
Net (decrease) increase in cash, cash equivalents and restricted cash		(28,629)		38,025
Cash, cash equivalents and restricted cash at beginning of year		$       160,145		$       150,474
Cash, cash equivalents and restricted cash at end of period		$       131,516		$       188,499
Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheet:
Cash and cash equivalents		$           2,265		$              558
Restricted cash		25,109		33,394
Cash equivalents included in funds held for clients		104,142		154,547
Total cash, cash equivalents and restricted cash		$       131,516		$       188,499

 

CBIZ, INC. SELECT FINANCIAL DATA AND RATIOS (UNAUDITED) (In thousands)
		March 31, 2023		December 31, 2022
Cash and cash equivalents		2,265		4,697
Restricted cash		25,109		28,487
Accounts receivable, net		442,781		334,498
Current assets before funds held for clients		501,617		397,113
Funds held for clients		148,240		171,313
Goodwill and other intangible assets, net		1,005,873		951,702
Total assets		2,038,196		1,879,124
Current liabilities before client fund obligations		310,942		338,940
Client fund obligations		150,216		173,467
Total long-term debt, net		401,772		263,654
Total liabilities		1,266,266		1,165,672
Treasury stock		(853,793)		(824,778)
Total stockholders' equity		771,930		713,452
Debt to equity		52.0 %		37.0 %
Days sales outstanding (DSO) (1)		94		74
Shares outstanding		50,312		50,180
Basic weighted average common shares outstanding		50,367		51,502
Diluted weighted average common shares outstanding		50,762		52,388
(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, 2022 was 94.

 

CBIZ, INC. GAAP RECONCILIATION Net Income and Diluted Earnings Per Share ("EPS") to Adjusted Net Income, EPS and EBITDA(1) (In thousands, except per share data)
	Three Months Ended March 31, 2023				Three Months Ended March 31, 2022
	Amounts		EPS		Amounts		EPS
Net income	$      73,160		$          1.44		$      58,127		$          1.10
Adjustments:
Transaction costs related to acquisitions (2)	611		0.01		1,329		0.03
Integration & retention costs related to acquisitions (2)	1,003		0.02		4,684		0.09
Income tax effect related to adjustments	(428)		(0.01)		(1,500)		(0.04)
Adjusted net income	$      74,346		$          1.46		$      62,640		$          1.18
Interest expense	$        3,641				$        1,259
Income tax expense	26,407				19,321
Gain on sale of operations, net	(99)				—
Tax effect related to the adjustments above	428				1,500
Depreciation	2,975				2,779
Amortization	5,650				5,394
Adjusted EBITDA	$    113,348				$      92,893
(1)  CBIZ reports its financial results in accordance with GAAP. This table reconciles Adjusted net income, Adjusted EPS and Adjusted EBITDA to the most directly       comparable GAAP financial measures, "Net income" and "Diluted earnings per share." Adjusted net income, Adjusted EPS and Adjusted EBITDA are not       defined by GAAP and should not be regarded as an alternative or replacement to any measurement of performance under GAAP. Adjusted net income, Adjusted       EPS and Adjusted EBITDA, 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. Amounts reported in 2023 related to the costs incurred related to the Somerset acquisition and those reported in 2022 related to the        Marks Paneth acquisition.

 

CBIZ, INC. GAAP RECONCILIATION Full Year 2023 Net Income and Diluted Earnings Per Share ("EPS") to Adjusted Net Income, EPS and EBITDA Guidance (Amount in millions, except per share data)
	Full Year 2023 Guidance
	Low				High
	Amount		Per Share		Amount		Per Share
Net income	$     121.1		$       2.31		$     123.2		$       2.36
Transaction and integration costs related to Somerset (1)	3.6		0.07		3.6		0.07
Income tax effect related to adjustments	(1.0)		$     (0.02)		(1.0)		$     (0.02)
Adjusted net income	$     123.7		$       2.36		$     125.8		$       2.41
Interest expense	$       20.8				$       20.8
Income tax expense	47.2				47.2
Tax effect related to the adjustments above	1.0				1.0
Depreciation and amortization	35.9				35.9
Adjusted EBITDA	$     228.6				$     230.7
GAAP diluted EPS for 2022			$       2.01				$       2.01
Adjusted diluted EPS for 2022 (2)			$       2.13				$       2.13
GAAP diluted EPS range			15 %				17 %
Adjusted diluted EPS range			11 %				13 %
GAAP Net income for 2022	$     105.4				$     105.4
GAAP Net income range	15 %				17 %
(1)  Includes estimated integration costs related to the Somerset 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 net income and adjusted net income and a reconciliation between GAAP diluted EPS and Adjusted diluted EPS for fiscal year ended       December 31, 2022 are presented as follows:
					Year Ended December 31, 2022
					In millions		EPS
		Net income			$                    105.4		$                      2.01
		Adjustments:
		Gain on sale of assets, net			(2.4)		(0.05)
		Transaction costs related to Marks Paneth			1.3		0.03
		Integration and retention costs related to Marks Paneth			9.2		0.18
		Income tax effect related to adjustments			(2.1)		(0.04)
		Adjusted net income			$                    111.4		$                      2.13

 

 

 

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SOURCE CBIZ, Inc.

FAQ

What were CBIZ's total revenues for the first quarter of 2023?

CBIZ reported total revenues of $454.6 million for the first quarter of 2023.

How much did same-unit revenue increase for CBIZ in Q1 2023?

Same-unit revenue increased by 10.0% in the first quarter of 2023.

What was the adjusted EPS for CBIZ in the first quarter of 2023?

The adjusted earnings per share for CBIZ in Q1 2023 was $1.46.

What is the revenue growth outlook for CBIZ in 2023?

CBIZ expects revenue growth between 8% to 10% for the year 2023.

How much did CBIZ repurchase in shares during Q1 2023?

CBIZ repurchased approximately 0.4 million shares during the first quarter of 2023.