CBIZ REPORTS FIRST-QUARTER 2024 RESULTS
- Total revenue increased by 8.7% in the first quarter of 2024.
- Same-unit revenue saw a growth of 5.9% compared to the same period in 2023.
- Net income rose by 5.1% in the first quarter of 2024.
- Adjusted EBITDA increased by 4.8% in the first quarter of 2024.
- Acquired operations contributed $12.8 million to revenue growth.
- CBIZ completed two strategic acquisitions in the first quarter including CompuData.
- The company affirms full-year guidance for revenue, GAAP EPS, and Adjusted EPS.
- CBIZ expects total revenue to grow within a range of 7% to 9% over the prior year.
- The company expects GAAP fully diluted earnings per share to grow by 13-15%.
- Adjusted fully diluted earnings per share are expected to grow by 12-14% over 2023.
- None.
Insights
CBIZ, Inc.'s first-quarter financial results exhibit a solid performance with a revenue increase of 8.7%, signaling consistent top-line growth. The addition of $39.7 million in revenue year-over-year demonstrates effective execution of their business strategy, particularly when considering the same-unit revenue growth of 5.9%, indicative of robust organic expansion. This is further supported by net income growth of 5.1% and a slight uptick in GAAP EPS.
From a valuation perspective, investors should note the Adjusted EPS increase of 5.5%, suggesting a focus on profitability. The disclosed Adjusted EBITDA growth of 4.8% also portrays healthy operational efficiency. However, adjusted figures should be approached with caution as they exclude certain expenses, potentially painting an optimized picture of financial health.
The balance outstanding on their unsecured credit facility and unused borrowing capacity reflects a stable financial position, offering flexibility for future strategic moves. Investors should observe the credit facility as a potential indicator of the company's ability to leverage for growth without excessively diluting shareholder value.
CBIZ's positive start to the year and the affirmation of their full-year guidance offer a reassuring signal for market stakeholders. The predicted revenue growth of 7% to 9% aligns with industry growth trends, indicating competitive stability. The emphasis on technology solutions through the acquisition of CompuData aligns with the broader industry's pivot towards digital and technological service offerings, potentially expanding the company's total addressable market.
Investors should consider the effective tax rate forecast of approximately 28% and its implications on net earnings. The projected growth in GAAP and Adjusted EPS reinforces investor confidence but must be balanced against the number of shares - with an expected count of 50.0 to 50.5 million, share dilution appears minimal, preserving shareholder value.
Overall, CBIZ's strategic acquisitions and the expected performance metrics should be perceived as indicators of stability and gradual growth, yet investors should remain vigilant of market dynamics that could affect future projections.
FIRST-QUARTER HIGHLIGHTS:
- TOTAL REVENUE UP
8.7% ; SAME-UNIT REVENUE UP5.9% - GAAP EPS UP
6.3% ; ADJUSTED EPS UP5.5% - NET INCOME UP
5.1% ; ADJUSTED EBITDA UP4.8%
For the 2024 first quarter, CBIZ recorded revenue of
Excluding non-recurring first-year integration expenses related to the previously announced acquisitions of Erickson, Brown & Kloster, LLC ("EBK") and CompuData, Inc. ("CompuData") during the first quarter of 2024, and similar expenses related to the acquisition of Somerset CPAs and Advisors ("
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 at the end of this release.
The balance outstanding on the Company's unsecured credit facility on March 31, 2024, was
Jerry Grisko, CBIZ President and Chief Executive Officer, said, "We are pleased to report a strong start to the year with growth coming from each of our major service lines across the business. Our results to date are in line with our expectations and position us well going into the second quarter and the rest of the year."
"We completed two strategic acquisitions in the first quarter including our recently announced acquisition of CompuData, a premier provider of technology solutions that are increasingly in demand by our clients and complement our broader accounting, tax and advisory offerings," he continued. "Based on what we are seeing in our own business and in the marketplace, we are confident in affirming our full-year guidance for revenue, GAAP EPS and Adjusted EPS," concluded Grisko.
2024 Outlook
- The Company expects total revenue to grow within a range of
7% to9% over the prior year. - The Company expects an effective tax rate of approximately
28% . - The Company expects a weighted average fully diluted share count of approximately 50.0 to 50.5 million shares.
- The Company expects GAAP fully diluted earnings per share to grow within a range of
13% to15% , to$2.70 $2.75 $2.39 - The Company expects Adjusted fully diluted earnings per share to grow within a range of
12% to14% , to$2.70 $2.75 $2.41
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/10188094/fc2e2d0632.
About CBIZ
CBIZ is a leading provider of financial, insurance and advisory services to businesses throughout
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: we may be more sensitive to revenue fluctuations than other companies, which could result in fluctuations in the market price of our common stock; payments on accounts receivable may be slower than expected, or amounts due on receivables or notes may not be fully collectible; we are dependent on the services of our executive officers, other key employees, producers and service personnel, the loss of whom may have a material adverse effect on our business, financial condition and results of operations; restrictions imposed by independence requirements and conflict of interest rules may limit our ability to provide services to clients of the attest firms with which we have contractual relationships and the ability of such attest firms to provide attestation services to our clients; our goodwill and intangible assets could become impaired, which could lead to material non-cash charges against earnings; certain liabilities resulting from acquisitions are estimated and could lead to a material non-cash impact on earnings; governmental regulations and interpretations are subject to changes, which could have a material adverse effect on our clients, our business, our business services operations, our business models, or our revenue; changes in
A more detailed description of such risks and uncertainties may be found in "Item 1A. Risk Factors" of the Company's Annual Report on Form 10-K for the year ended December 31, 2023, and the Company's other filings with the Securities and Exchange Commission at www.sec.gov.
All forward-looking statements made in this release are made only as of the date hereof. The Company does not undertake any obligation to publicly update or correct any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
CBIZ, INC. FINANCIAL HIGHLIGHTS (UNAUDITED) THREE MONTHS ENDED MARCH 31, 2024 AND 2023 (In thousands, except percentages and per share data)
| ||||||||
Three Months Ended March 31, | ||||||||
2024 | % | 2023 | % | |||||
Revenue | 100.0 % | 100.0 % | ||||||
Operating expenses (1) | 376,485 | 76.2 | 341,011 | 75.0 | ||||
Gross margin | 117,812 | 23.8 | 113,595 | 25.0 | ||||
Corporate general and administrative expenses (1) | 18,711 | 3.8 | 15,598 | 3.4 | ||||
Operating income | 99,101 | 20.0 | 97,997 | 21.6 | ||||
Other (expense) income: | ||||||||
Interest expense | (4,511) | (0.9) | (3,641) | (0.8) | ||||
Gain on sale of operations, net | — | — | 99 | — | ||||
Other income, net (1) (2) | 9,424 | 1.9 | 5,112 | 1.1 | ||||
Total other income, net | 4,913 | 1.0 | 1,570 | 0.3 | ||||
Income before income tax expense | 104,014 | 21.0 | 99,567 | 21.9 | ||||
Income tax expense | 27,130 | 26,407 | ||||||
Net income | $ 76,884 | 15.6 % | $ 73,160 | 16.1 % | ||||
Diluted earnings per share | $ 1.53 | $ 1.44 | ||||||
Diluted weighted average common shares outstanding | 50,221 | 50,762 | ||||||
Other data: | ||||||||
Adjusted EBITDA (3) | ||||||||
Adjusted EPS (3) | $ 1.54 | $ 1.46 | ||||||
(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, 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, 2024, and 2023, are as follows (in thousands): | |
Three Months Ended March 31, | ||||||||
2024 | % of Revenue | 2023 | % of Revenue | |||||
Operating expense | $ 8,576 | 1.7 % | $ 4,760 | 1.0 % | ||||
Corporate general and administrative expense | 1,057 | 0.2 % | 642 | 0.1 % | ||||
Other income, net | 9,633 | 1.9 % | 5,402 | 1.2 % | ||||
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, 2024, and 2023, are as follows (in thousands): | |
Three Months Ended March 31, | |||||||||||||||
2024 | 2023 | ||||||||||||||
As | Deferred | Adjusted | % of Revenue | As | Deferred | Adjusted | % of | ||||||||
Gross margin | $ 8,576 | 25.6 % | $ 4,760 | 26.0 % | |||||||||||
Operating income | 99,101 | 9,633 | 108,734 | 22.0 % | 97,997 | 5,402 | 103,399 | 22.7 % | |||||||
Other income (expense), net | 9,424 | (9,633) | (209) | — % | 5,112 | (5,402) | (290) | (0.1) % | |||||||
Income before income tax expense | 104,014 | — | 104,014 | 21.0 % | 99,567 | — | 99,567 | 21.9 % | |||||||
(2) | Included in "Other income, net" for the three months ended March 31, 2024, and 2023, is expense of |
(3) | Refer to the schedules reconciling Adjusted earnings per share and Adjusted EBITDA to the most directly comparable GAAP measures at the end of this release, 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, | |||||
2024 | 2023 | ||||
Revenue | |||||
Financial Services | $ 372,630 | $ 343,086 | |||
Benefits and Insurance Services | 108,408 | 100,054 | |||
National Practices | 13,259 | 11,466 | |||
Total | $ 494,297 | $ 454,606 | |||
Gross Margin | |||||
Financial Services | $ 107,069 | $ 98,643 | |||
Benefits and Insurance Services | 24,771 | 23,131 | |||
National Practices | 1,326 | 883 | |||
Operating expenses - unallocated (1): | |||||
Other expense | (6,778) | (4,302) | |||
Deferred compensation | (8,576) | (4,760) | |||
Total | $ 117,812 | $ 113,595 | |||
(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 or 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, | ||||
2024 | 2023 | |||
Net income | $ 76,884 | $ 73,160 | ||
Adjustments to reconcile net income to net cash used in operating activities: | ||||
Depreciation and amortization expense | 9,468 | 8,625 | ||
Gain on sale of operations, net | — | (99) | ||
Bad debt expense, net of recoveries | 550 | 461 | ||
Adjustments to contingent earnout liability, net | 434 | 630 | ||
Stock-based compensation expense | 2,638 | 3,831 | ||
Other noncash adjustments | 2,207 | 2,749 | ||
Net income, after adjustments to reconcile net income to net cash used in | 92,181 | 89,357 | ||
Changes in assets and liabilities, net of acquisitions and divestitures | (155,901) | (133,868) | ||
Net cash used in operating activities | (63,720) | (44,511) | ||
Net cash used in investing activities | (28,702) | (45,896) | ||
Net cash provided by financing activities | 71,188 | 61,778 | ||
Net decrease in cash, cash equivalents and restricted cash | (21,234) | (28,629) | ||
Cash, cash equivalents and restricted cash at beginning of year | $ 157,148 | $ 160,145 | ||
Cash, cash equivalents and restricted cash at end of period | $ 135,914 | $ 131,516 | ||
Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheet: | ||||
Cash and cash equivalents | $ 1,402 | $ 2,265 | ||
Restricted cash | 27,740 | 25,109 | ||
Cash equivalents included in funds held for clients | 106,772 | 104,142 | ||
Total cash, cash equivalents and restricted cash | $ 135,914 | $ 131,516 | ||
CBIZ, INC. SELECT FINANCIAL DATA AND RATIOS (UNAUDITED) (In thousands) | ||||
March 31, 2024 | December 31, 2023 | |||
Cash and cash equivalents | 1,402 | 8,090 | ||
Restricted cash | 27,740 | 30,362 | ||
Accounts receivable, net | 504,107 | 380,152 | ||
Current assets before funds held for clients | 574,819 | 453,499 | ||
Funds held for clients | 147,345 | 159,186 | ||
Goodwill and other intangible assets, net | 1,038,410 | 1,008,604 | ||
Total assets | 2,196,998 | 2,043,592 | ||
Current liabilities before client fund obligations | 322,021 | 352,028 | ||
Client fund obligations | 148,034 | 159,893 | ||
Total long-term debt, net | 436,344 | 310,826 | ||
Total liabilities | 1,329,909 | 1,251,974 | ||
Treasury stock | (910,322) | (899,093) | ||
Total stockholders' equity | 867,089 | 791,618 | ||
Debt to equity | 50.3 % | 39.3 % | ||
Days sales outstanding (DSO) (1) | 101 | 78 | ||
Shares outstanding | 50,112 | 49,814 | ||
Basic weighted average common shares outstanding | 50,045 | 49,989 | ||
Diluted weighted average common shares outstanding | 50,221 | 50,557 | ||
(1) | DSO is provided for continuing operations and represents accounts receivable, net, at the end of the period, divided by trailing twelve months 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, 2023, 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, | |||||||
2024 | 2023 | ||||||
Amounts | EPS | Amounts | EPS | ||||
Net income | $ 76,884 | $ 1.53 | $ 73,160 | $ 1.44 | |||
Adjustments: | |||||||
Transaction costs related to acquisitions (2) | — | — | 611 | 0.01 | |||
Integration & retention costs related to acquisitions (2) | 582 | 0.01 | 1,003 | 0.02 | |||
Facility optimization costs (3) | 255 | 0.01 | — | — | |||
Income tax effect related to adjustments | (218) | (0.01) | (428) | (0.01) | |||
Adjusted net income | $ 77,503 | $ 1.54 | $ 74,346 | $ 1.46 | |||
Interest expense | $ 4,511 | $ 3,641 | |||||
Income tax expense | 27,130 | 26,407 | |||||
Gain on sale of operations, net | — | (99) | |||||
Tax effect related to the adjustments above | 218 | 428 | |||||
Depreciation | 3,523 | 2,975 | |||||
Amortization | 5,945 | 5,650 | |||||
Adjusted EBITDA | $ 118,830 | $ 113,348 | |||||
(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 financial information determined under GAAP. Adjusted net (loss) income, Adjusted EPS and Adjusted EBITDA exclude significant non-operating related gains and losses that management does not consider on-going in nature. These Non-GAAP financial measures are used by the Company as a performance measure to evaluate, assess and benchmark the Company's operational results and to evaluate results relative to employee compensation targets. Accordingly, the Company believes the presentation of these Non-GAAP financial measures allows its stockholders, debt holders, and other interested parties to meaningfully compare the Company's period-to-period operating 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 2024 related to the costs incurred related to the acquisitions of EBK and CompuData, and those reported in 2023 related to the |
(3) | These costs related to incremental non-recurring lease expense incurred as a result of CBIZ's real estate optimization efforts. |
CBIZ, INC. GAAP RECONCILIATION Full Year 2024 Diluted Earnings Per Share ("EPS") Guidance to Full Year 2024 Adjusted Diluted EPS | |||
Full Year 2024 Guidance | |||
Low | High | ||
Diluted EPS - GAAP Guidance | $ 2.70 | $ 2.75 | |
Adjusted Diluted EPS Guidance | $ 2.70 | $ 2.75 | |
GAAP Diluted EPS for 2023 | $ 2.39 | $ 2.39 | |
Adjusted Diluted EPS for 2023 | $ 2.41 | $ 2.41 | |
GAAP Diluted EPS Range | 13 % | 15 % | |
Adjusted Diluted EPS Range | 12 % | 14 % | |
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SOURCE CBIZ, Inc.
FAQ
What was CBIZ's total revenue growth in the first quarter of 2024?
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What strategic acquisitions did CBIZ complete in the first quarter of 2024?
What is CBIZ's full-year guidance for revenue growth in 2024?
