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CBIZ Reports First-Quarter 2018 Results

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CBIZ Reports First-Quarter 2018 Results

PR Newswire

CLEVELAND, April 26, 2018 /PRNewswire/ --

FIRST-QUARTER HIGHLIGHTS:

  • REVENUE +10.2%
  • SAME-UNIT REVENUE +5.8%
  • EPS FROM CONTINUING OPERATIONS +42.2%

CBIZ, Inc. (NYSE:CBZ) today announced financial results for the first quarter ended March 31, 2018.

For the 2018 first quarter, CBIZ reported revenue of $266.1 million, an increase of $24.6 million, or 10.2%, over the $241.5 million reported in 2017. Same-unit revenue increased by $14.0 million, or 5.8%, for the quarter, compared with the same period a year ago. Newly acquired operations contributed $10.6 million, or 4.4%, to revenue growth in the quarter. CBIZ reported income from continuing operations of $35.8 million, or $0.64 per diluted share, in the 2018 first quarter, compared with income of $25.0 million, or $0.45 per diluted share, for the same period a year ago. Adjusted EBITDA for the first quarter was $55.9 million, compared with $48.3 million for the first quarter of 2017.

Jerry Grisko, President and Chief Executive Officer of CBIZ, said, "We are pleased to record strong first quarter revenue growth as well as improved margins.  Our results were bolstered by strong demand for our core services, a high level of optimism among our clients regarding the general business climate, new consulting and planning engagements related to the Tax Cuts and Jobs Act of 2017, and improved results from a number of our project-oriented businesses.  We also continue to benefit from the acquisitions that we made in recent years, and we are pleased to have completed two additional acquisitions so far this year."

2018 Outlook

  • The Company expects growth in total revenue within a range of 5% to 8%.
  • The Company expects to report an effective tax rate of approximately 25% as a result of the Tax Reform Act, although a number of factors may impact the tax rate. The Company expects a weighted average fully diluted share count of approximately 56.0 million shares for full-year 2018.
  • The Company expects to achieve growth in fully diluted earnings per share within a range of 13% to 17% over the $0.92 reported for 2017. Adjusted for the one-time 2017 impact of the Tax Reform Act, the Company expects to achieve growth within a range of 20% to 24% over the adjusted $0.87 reported for 2017.

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/10119212 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 web site 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), April 26, through 5:00 p.m. (ET), May 1, 2018. 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 10119212.

About CBIZ

CBIZ, Inc. provides professional business services that help clients better manage their finances, employees and insurance needs. CBIZ provides its clients with financial services including accounting, tax, financial advisory, government healthcare consulting, risk advisory, and valuation services. Benefits and insurance services include group health benefits consulting, property and casualty insurance, retirement plan consulting, payroll, and HR consulting. As a leading provider of accounting, insurance and other professional consulting services to businesses throughout the United States, the Company's services are provided through more than 100 Company offices in 33 states. For more information, please 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 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, 2018 AND 2017
(In thousands, except percentages and per share data)




THREE MONTHS ENDED




MARCH 31,




2018



%



2017



%


Revenue


$

266,090




100.0

%


$

241,459




100.0

%

Operating expenses (1)



204,750




76.9

%



192,766




79.8

%

Gross margin



61,340




23.1

%



48,693




20.2

%

Corporate general and administrative expenses (1)



10,028




3.8

%



8,768




3.7

%

Operating income



51,312




19.3

%



39,925




16.5

%

Other (expense) income:

















Interest expense



(1,780)




-0.7

%



(1,517)




-0.6

%

Gain on sale of operations, net



663




0.3

%



22




0.0

%

Other (expense) income, net (1) (2)



(1,229)




-0.5

%



2,737




1.1

%

Total other (expense) income, net



(2,346)




-0.9

%



1,242




0.5

%

Income from continuing operations before income tax

   expense



48,966




18.4

%



41,167




17.0

%

Income tax expense



13,156








16,141






Income from continuing operations



35,810




13.5

%



25,026




10.4

%

Income (loss) from operations of discontinued businesses, net of   tax



41








(152)






Net income


$

35,851




13.5

%


$

24,874




10.3

%


















Diluted earnings per share:

















Continuing operations


$

0.64







$

0.45






Discontinued operations



-








-






Net income


$

0.64







$

0.45























Diluted weighted average common shares outstanding



55,924








55,214






Other data from continuing operations:

















Adjusted EBITDA (3)


$

55,858







$

48,303






 

(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" ($0.1 million income in 2018 and $3.0 million expense in 2017, or 0.0% and (1.2%) of revenue, respectively) and "Corporate general and administrative expenses" ($16 thousand income in 2018 and $0.3 million expense in 2017, or 0.0% and (0.1%) of revenue for 2018 and 2017, respectively) and are directly offset by deferred compensation gains or losses in "Other (expense) income, net" ($0.1 million expense in 2018 and $3.3 million income in 2017, or 0.0% and 1.3% 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 three months ended March 31, 2018 and 2017, is expense of $1.6 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 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,




2018



2017


Revenue









Financial Services


$

180,603



$

158,633


Benefits and Insurance Services



77,330




75,164


National Practices



8,157




7,662


Total


$

266,090



$

241,459











Gross Margin









Financial Services


$

47,570



$

39,244


Benefits and Insurance Services



16,197




15,022


National Practices



882




655


Operating expenses - unallocated (1):









Other



(3,423)




(3,274)


Deferred compensation



114




(2,954)


Total


$

61,340



$

48,693


 

(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)




THREE MONTHS ENDED




MARCH 31,




2018



2017


Net income


$

35,851



$

24,874


Adjustments to reconcile net income to net cash provided by operating

   activities:









Depreciation and amortization expense



5,775




5,641


Bad debt expense, net of recoveries



1,766




734


Adjustments to contingent earnout liability



1,609




616


Other



(1,244)




195


Net income, after adjustments to reconcile net income to net

   cash used in operating activities



43,757




32,060


Changes in assets and liabilities, net of acquisitions and divestitures



(64,396)




(46,434)


Operating cash flows used in continuing operations



(20,639)




(14,374)


Operating cash flows provided by (used in) discontinued operations



139




(118)


Net cash used in operating activities



(20,500)




(14,492)


Net cash provided by investing activities



37,455




48,847


Net cash used in financing activities



(20,296)




(36,654)


Net decrease in cash, cash equivalents and restricted cash


$

(3,341)



$

(2,299)


 

 

CBIZ, INC.
SELECT FINANCIAL DATA AND RATIOS
(In thousands, except for percentages and days sales outstanding)




MARCH 31,



DECEMBER 31,




2018



2017


Cash and cash equivalents


$

295



$

424


Restricted cash



29,773




32,985


Accounts receivable, net



261,336




188,300


Current assets before funds held for clients



315,907




245,061


Funds held for clients



147,655




203,112


Goodwill and other intangible assets, net



631,956




613,206











Total assets


$

1,214,353



$

1,176,231











Notes payable, current


$

1,743



$

1,861


Current liabilities before client fund obligations



139,687




130,664


Client fund obligations



148,654




203,582


Notes payable, non-current



1,824




2,164


Bank debt, net of debt issuance costs



214,002




177,672











Total liabilities


$

642,737



$

645,352











Treasury stock


$

(491,604)



$

(491,046)











Total stockholders' equity


$

571,616



$

530,879











Debt to equity



38.1

%



34.2

%

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



92




72











Shares outstanding



54,956




54,592


Basic weighted average common shares outstanding



54,071




53,862


Diluted weighted average common shares outstanding



55,924




55,689


 

(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, 2017 was 91.

 

 

CBIZ, INC.
GAAP RECONCILIATIONS


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




THREE MONTHS ENDED




MARCH 31,




2018



2017


Income from continuing operations


$

35,810



$

25,026


Interest expense



1,780




1,517


Income tax expense



13,156




16,141


Gain on sale of operations, net



(663)




(22)


Depreciation



1,404




1,247


Amortization



4,371




4,394


Adjusted EBITDA


$

55,858



$

48,303


 

(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.

 

 

Guidance on 2018 Earnings Per Diluted Share from Continuing Operations











Low



High


2018 outlook growth in earnings per share


13

%



17

%

2018 outlook earnings per share

$

1.04



$

1.08










2018 outlook growth in earnings per diluted share, excluding impact of Tax Reform Act


20

%



24

%

 

Cision View original content:http://www.prnewswire.com/news-releases/cbiz-reports-first-quarter-2018-results-300636833.html

SOURCE CBIZ, Inc.

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