CBZ - Earnings call transcript Q4 2017

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to the CBIZ Fourth Quarter and Full Year 2017 Results Conference Call. All participants will be in listen only mode. [Operator Instructions] Please note, this event is being recorded. At this time, I would like to turn the conference over to Lori Novickis, Direct of Corporate Relations. Please go ahead.

Lori Novickis

Denise. you, Thank and CBIZ everyone conference for us joining Good quarter thank and the fourth results full for morning, you year call. XXXX been Relations with press www.cbiz.com. connection call, posted has on In the of page this Investor our website, release today's being is also This webcast. call found to be our link can webcast the well live as A website. replay a as also on

can certain Before be release. of the call, during we you remind that reconciliation financial the our begin in A may found presentation, non-GAAP discuss tables to these press measures. we measures would like today's financial management of

remember forward-looking information are Finally, that of not such management expectation managements performance. make may this current statements on future and do also guarantee based as date statements and

to A Securities results differ Commission. found predict. sometimes do Forward-looking can detailed and filings more and with Actual the and assumptions statements involved certain difficult uncertainties can materially. risks, of the company's be and uncertainties Exchange such description in risks be that can

CEO Grisko, his opening Joining us the for to Grisko for and now Jerry will Officer. call today's Grove, Jerry over turn remarks. call President Financial I Chief and are Jerry? Ware

Jerry Grisko

for XXXX. you, the the morning, and With results this Lori fourth release were of pleased report strong full Thank quarter we year and everyone. to morning's good both

share. both per improvement growth the in For the in year, and earnings and continued in pre-tax growth revenue quarter we reported our margin and

be the while that growth those negatively achieved quarter. of we quarter, timing of remarks fourth that with impacted we noted within on revenue we events number revenue unit recovered, our call lesser. total to might for In that X.X%, last you unusual growth of Financial expected and revenue remember revenue the the discussed much third Services we For earnings Group X.X% our of same our that

that attributable revenue otherwise Services portion work is Financial very that of expected completed been in and unit growth with would quarter. same of came the our in the quarter fourth to of strong, growth X.X%. revenue third As growth Group the XX.X% in have A

that slightly third to XXXX. We expect Insurance quarter, continue into carry also by Switching to from fourth declining revenue first group Group, of larger from Benefits fluctuations in total that work the of contributor quarter the in our a our revenue X% largest to transactional revenue to and year-to-year. to portion of some revenue are within increased susceptible organic those X.X%. and see quarter results by far The quarter-to-quarter declines with more from businesses, which came more in number

revenue same X.X%. full the by by For year unit and for company the revenue increased X.X% grew

high-end earnings our increase we our an Cash per in year a of XXXX at X.X% was achieved the reported growth a adjusted XX.X% also detail strong guidance. the from impact the basis in improvement of year-end address in this will XX a for help moment tax a and in to margin continue flow ago. the greater point of Ware $XXX drive performance reported We which which share, Act a pre-tax continuing million year. was to Reform for million, $XX.X over the that one-time operations EBITDA Adjusted be

grew the of Revenue X.X%. Services increasing within and declines our from operating to two to Like our the Benefits fourth revenue Insurance same came grew the Group and Turning in the a of number national Group within results revenue largest Benefits transactional declined of X.X% quarter revenue by same largest by unit full-year our full-year, Insurance the segments, performance X.X%. unit X.X% businesses. with our while by Group for slightly Financial our revenue by contributor

group developing over basis in XXXX. our in are Group that growth revenue training that believe points improved the in future. hiring, we XXXX revenue will While by a making still organic our slightly Benefits negative in steady investments within improvement that Insurance in result the full-year for we and results And XXX the new organic producers and

during expected strategic we're have four closed that XXXX revenue. to are to to pleased million add Turning acquisitions, acquisitions in approximately annualized $XX

addition, of of Advisors CMF this Transaction financial last Laurus industry of month. earlier firms. the In consulting we June The providing acquisition year to middle addition our with announced position Laurus together Associates in services in equity acquisition closed private strengthens leader advisory as we an the of that and market

Grove, So Chief with it to over me turn let Officer. our Ware those comments, Financial

Ware Grove

you, Thank and everyone. good morning, Jerry,

highlights minutes outlook minutes reported quarter impact few the this will the for tax few for we the our to XXXX fourth for the results impact XXXX. take of results also Let this run reform want to me morning full-year And to issued I of explain take and the a a and through XXXX. on how

of closed During acquisition we annually acquisitions million mentioned, effective related cash for combined acquisitions the XXXX. and Laurus we payments used business, acquisition Jerry recently On XXXX approximately in million as Denver these the based earnout approximately which including Transaction XXXX, payments X, acquisitions made of prior We years. contribute will a four February during announced $XX.X Advisors for to $XX basis revenue. was

approximately in XX, and XXXX. future we In was repurchases in repurchased XXXX, of the XXXX, approximately estimated million each acquisitions million for million the at $XX.X our fourth December in $XXX,XXX spending XXXX, closed and active $XX.X of were $X.X cash for XXX,XXX share fourth quarter. shares XXXX, in quarter already As on XXXX earnout during XXXX we in approximately payments and

we by several XXXX repurchased million was total For at Capital year. the primarily and million. million year the the this X.X million, fourth $XX.X cost a and full that spending in occurred the quarter during XXXX, office moves of $XX.X driven approximately was capital approximately approximately major $X shares spending of was year approximately for of full

XX expected for is Bad to total basis XX with the be million year-end XXXX, sales days XX compares to revenue year. for XXXX, on compared expense points XX that debt the $X prior that was for spending revenue days points was $X basis year. a annually. prior total and capital receivables compares annual forward to on outstanding Going million within Days range at

As leverage This range operations. to Jerry is tax margin XX income basis our very the XX to pleased period achieve on over in report basis commented, points from XX a us annual points growth earnings within we continuing and per share are of of a long in a the operating time. before higher improvement rate business within our earnings has target and of helped

year. As we with XXXX, on X.X% G&A plan, deferred continuing revenue general our expense. of the expense the of administrative losses gains the grow, prior was in for revenue or of at accounting we compensation full compared assets are for held leveraging year impact the X.X% the for Eliminating the

this the this are that the in in footnotes You numbers released outlined we can on find further morning. details

XXXX. the note $X.X reduce the tax the the fourth tax is XXXX. rate act impact an turning in by net sheet of a was of December and The reform, quarter of our Now to as of impact differed reflected for tax in approximately year you this for of full million. XX.X% full tax reform rate liability When passed XXXX will we favorable tax our on balance reduction effective year

earnings eliminating yearend is The period prior to the $X.XX, a onetime to number. over to outlines diluted the benefit operations flow adjusted reported described from Now longer fully this onetime of schedule expected this the represents a tax represents a earnings impact with the share and release, XX.X% above calculation for over GAAP which this included There share have year. per increase cash be benefit this this of time. adjusted the $X.XX for earnings per continuing share reported the reform $X.XX, XXXX earnings the per reported in a positive full year is a of a and reconciliation earnings is would

As growth compared impact we per the year-end expected to in earnings XXXX, going XXX, to about adjusted the XXXX eliminate earnings share into at compare for talk and we per the expectations share forward XXXX. want onetime

impact stock tax for expense the the onetime beyond we year-end, the favorable and new standard shares as on of reduction favorable of XXXX reform on and due year share of the Now exercised a the several that price implemented commented exercised. compared rate data tax XXXX. approximately unpredictable impact the of impact XX.X% full accounting effective was stock Absent The XX%, number for January on to of on future is have accounting this previously dependent such with the the compensation tax the of tax rate. impact favorable of was rate the reform the XXXX to compensation factors year-end in for is impact

So there may of be some volatility to the impact this.

of XX% XX% that XXXX aware Tax the statutory is a compared federal everyone Act Jobs the Now and income with is previously. rate Cuts tax rate statutory corporate under now

tax rate However expect Considering a value eliminate or number of XX% limit reduction XX%. these achieve approximately may so deductions a that rate we of the either the there reduction in of effective are to full not be realized. factors statutory factors CBIZ the

benefit approximately XX%. the So as one-time effective expect somewhat expectation of year-end volatile. at tax and compensation we tax reminder I as with effective impact rate an could an XX% accounting XXXX commented impact approximate just rate favorable a be excluding in of this of the stock includes This

approximately at $XXX times for at December rate. XXXX our effective have acquisition positive $XX.X million December XXXX. is expected at The very a and X.X on flow plenty $XXX.X impact $XXX approximately a the X.X% flow tax XX, is outstanding XXXX our Cash of $XXX year-end to year. have year-end a our has we reduction that program. and and debt XX, EBITDA With reduction on XX% at for So We financing and historically was million. million strategic of been balance the have that's million strong the of in the we for reported facility over capacity unsecured the increase capital rate steady tax continue - credit EBITDA in unused not million there cash capacity at essentially reported will with XXXX commensurate prior and CBIZ

the review we under past and We We with are and pipeline one acquisitions approach done with potential expect XXXX, fit have in the three our constrained of always towards acquisitions. reported to the as returns five already potential to of have an close XXXX. transactions to our in transaction not in course during active capital we appropriate the capital right currently we're find careful on

Our acquisitions. first using priority strategic to in be continues capital

to repurchase will our stock. continue also to look We for shares common opportunities of

to used active find the price year. opportunistic each newly take With dilutive repurchases. approach in the to our share issued shares become impact of neutralize have in We opportunities intent more and to our share we volatility an

filed disclosure to we annual over shares Board X our renewed week, XX months. to next repurchase million the earlier up a recently the authorization As this

the early as So forward XXXX, the this very the for remains for we're positive into At Act. and of in clients through navigate CBIZ. point helping plan our Tax XXXX impact go we environment business Reform

specific the throughout doing organization comprehensive national are teams that job a is in a tax touch shorter impact investments initiatives all dive XX% and in deep the past looking will supported prospects make details Internally, some Considering with for clients office million materials tax country. a fully opportunities. industries planning topics scope are by useful given our following year, And the underway of materials sure XX effort includes favorable more providing in potential this share approximately and at a of of expect The office diluted that is we forward variety broad can in the account market about of reform year. these investing tax growth planning This tax There repurchase XXXX. in outlook variety client to of our tax broader share tax XXXX, a accelerate to a on targeted that any on XXXX. have appropriate reform, the in shares our we provide that to tools rate that we're is each $X.X towards discussions Combined always we the approximately a outlined the effective national top I of each earlier, of the local them great and to enter of of we're early a XXXX. this number of engaging with of plus We expected million service highly webinars tax share impact the stage as year. in market.

X% made including impact for acquisition year, during $XXX.X reported to expect past XXXX. the X% Xst, for February acquisitions the recent total the revenue of million announced increase over the we to within XXXX range of With the a

growth of $X.XX a XX% earnings be XXXX. tax in XXXX. to XXXX per the $X.XX expectations you growth increase GAAP per earnings due XXXX to share to range share XX% share and down, increase of balance expected drive XX% of expect improvements growth this expect reported per margin XX% Comparing share the the will revenue XXXX, earnings in as expected of to the we to for the We within XX%, expected about And expected earnings over for XXXX. adjusted the break a lower of range to for rate per to diluted with

I'll So with over turn it these conclude to I'll back Jerry. comments, and

Jerry Grisko

Ware. you, Thank

As we've one economic commented we products clients past, services expand in number and and the that the in of good in essential need times strength products typically provide services more the bad. in of of change. and the in CBIZ that these of favorable times is of scope and our environments The

we demand we XX,XXX As opportunities general clients, our clients the the look the to changes how optimism changes recent the the were and business of to leaders are strong opportunities Act. we regulatory small the laws and presented related tax particularly the Reform presented the market by environment, middle our the strength the through services forward business clients. impact in XXXX, and by encouraged advisory new among economy, Tax of tax and these very XX,XXX more changes for likely to With over anticipate than individual to the

In companies, to apply rate our will also businesses. other federal the lower addition, overall many benefit tax we from like

from tax As the allow business. Ware commented, from of be to our to effective portion A enhance of XX% growth certain savings expect accelerate to approximately will rate XX%. investments reduced rate the us we to the lower the federal

growth us producers For Benefit that number of supported of will rate we and to example, hired, to planning increase Insurance organic increase group. our revenue the in trained Group, which are the new allow and in being

also planning of and businesses that in middle brings branding recognition to our investment individuals. our high are worth to the market small net CBIZ unique national value We increase proposition improve to market to

investments would us been of of Act the overtime, the those the have growth resulting the provides and to from accelerate opportunity with the many investments business. While Tax made these savings Reform

Ware, delivering to of able those to guidance earlier investments, XX% be results XX% our the to make per while including pleased operating the described earnings are improvement by We our year-over-year also share. on in in improvement our

continue to three we XXXX. close transactions goal the to have for to full Turning questions to the attractive is very opportunities and acquisitions, answers. closing predict, acquisition of in it five that, while With to our over of a pipeline remains and timing I'll of turn difficult transactions

Operator

Thank you, Mr. Grisko.

Please will come [Operator Jim First begin Instructions] And first your We go the MacDonald will session. now of question-and-answer from question Analysis. ahead.

Jim MacDonald

Yes, good morning, guys.

Jerry Grisko

Good morning, Jim.

Jim MacDonald

Could first the voice. at tax enough talk you plus quarter raspy mentioned in bit first to do the when expect, your help the be services, tax lifting my that heavy And on do you to quarter? a for have sorry that will advice? little the the and do resources I'm all impact in did you able you - help in the fourth you quarter do

Jerry Grisko

and little because fielding reaching for clients proactively and into our but would say in not Yes, as had offices prospects, calls late so the we I so impact did really the the of that surveyed were of translate period very fourth Jim the time. quarter that tax revenue obviously they it lots impact came it revenue, on out

Your to as and and conversations we we've quarter obviously February from period or first typically good one, with of question of our the the Tax with capacity time. which clients is again anecdotally of are during With lots the know prospects that it and know is that at a that Act. into had said, near usually Reform I full offices speaking ramps up on March impact you

filing on a April a the time, nice will hopefully after lift don't comes conversations in - deadlines slower the I period continue tax translate XXth quarter going first beyond seasonally have our and be into to which revenue of it's XX. think into a in material April impact while our So material those

Jim MacDonald

also Great. have when And explain then down, maybe catch the a so up some you blip technical up one, revenue, you expenses in quarter to that fourth your they me? sequentially but usually blipped can

Ware Grove

to? expenses which you Jim, you referring are talking - are

Jim MacDonald

expenses. Operating

Ware Grove

There to we some in spoke minor may in of one our national units. activities have units, the been increase some the due of - one as did a restructuring modest restructuring

Jerry Grisko

that to created volatility have anything than might point other in some expenses. or I spike operating can't

Jim MacDonald

of Yes, of more maybe which Rabbi so I guess I'm gross trust quarters, was in not net. is that the probably part it impact looking at probably an a

Ware Grove

Jim, that the for of of certainly impact exactly for G&A but that, the I or cleansing and Rabbi eliminating for assume Yes, quarter had kind expenses impact were both big a fourth the operating expenses. year the trust in and full

Jim MacDonald

going some you maybe are you activities to going that to it - think were give Jerry beside growing could mentioned get I other going some the do to to what some And again? thoughts sounded do you're are investments do benefits, you and there that Okay. on group

Jerry Grisko

so organic Yes, we've at look that think in said really drag really group Jim, you on really past I there in has revenue the as if come-in the buckets. two

of some our was on to search, their the growth quarter-to-quarter tend largest nature that from year. by to life revenue like and or project to impact harder businesses very really insurance, is predict the period-to-period. and first the be oriented So like more more both which think in quarter national executive the transactional contributor I And

that other quite employee product thing group, our of groups When is commented look benefits actually at quartile they we we a at on The number or top the productivity based the in are them. need looked the we standards the and for past with decile more have but as we of pleased have that group of that in experienced nice the second year-over-year industry we've comparables, sequential producers quarter-over-quarter. really industry very typically produce is that just the team. really employee The benefits improvement have we of three on producers

past that new set we and months XX so producers that recognition team. to And out really add the with over realization to

that we to only but to be we numbers, adding are wanted adding are to help also make them to sure be able not We successful. processes

recruiting, training, it's mentoring, our our developing, So it's cetera. et

ramped process new and those we in we see group. the the So we beyond those organic really fourth that coming as quarter considerably hiring and into - result from that of producers of revenue of will will investments put and most XXXX that we continue XXXX, numbers a come of up improved place saw into expected that

Operator

McDonald, question, did have sir. further Mr. you And any

Jim MacDonald

acquisitions, about cash more any so from uses cash other the you have, dividends, these more thought talked operational better sorry going uses repurchases, Yes, on cash. flow of you're of to

Jerry Grisko

to So, we commented, a constrained really be been of Jim We're to pipeline I full we've we in and have, never disciplined interested as cash through obviously as very know, flow acquisitions. you acquisitions, that continue that growing making. beyond most acquisitions reasonable we're are those return provide priority. fit, make right our that which to important the sure the cultural investments able we're then that And is a on

certainly flow dry really increase we've but been cash us regard. powder So, gives the in incremental constrained there, that never capital

that will to had we period to as to continue the we've continue as is I that which outlook So, time. everything to them in of same think prudent can any to we of close before, do - build and given is many pipeline

Jim MacDonald

Great, thanks much. very

Operator

time. no this And questions showing Instructions] I'm additional [Operator at

Asset. We that like the and to question ACK an you'd is Stefan it it, will question, conclude [indiscernible] do of in, answer additional Please if go - from ahead. we come has take have

Unidentified Analyst

morning. good Hey,

Jerry Grisko

morning. Good

Unidentified Analyst

think, wanted organic, was the just I follow-up Jerry - financial I services said was what X.X%? up to QX on

Jerry Grisko

Yes, that's correct.

Unidentified Analyst

catch up obviously rate much the any underlying - in parse step third versus way was that that's growth have growth the much up organic there would how of how out to from quarter been? revenue of what Is rate, the that

Jerry Grisko

have incremental, how what I'm question is, much expected? again sorry, would was the been over

Unidentified Analyst

words another in due that weather slippage addressed in the QX to had you Florida. some you well, Yes,

an X.X% revenues really wondering and specifically, think then impact I if in sounds rate like business kind been just the way to organic grow the some at characterize on confidence QX. catch you continue curious I'm other on and there's basis, basis? said we of tax have normalized know have up XXXX, probably can financial I'm reform from it's into would to it way, these with to what hard Or more but a curious And go that just you mid-single-digit still in any I'm So isolate whether that? services just as the

Ware Grove

lost. this it's Yes, expected with to a precisely revenue due in versus of in this clearly, But tell the pointed a is delays $X couple that, million to our much share hurricane a exactly comments quarter, Ware, we how came question. the third to and in to light at we of hard healthcare recapture government stage the it's was in impact of good what great a that really We came contract consulting.

was into think the and at is fourth encourage the into a probably organic portion What quarter. good how you of indicator XXXX it's is of good fair Financial kind revenue a performing. X.X% as we to probably how year Group the that Services total So, the I growing came that's go for that to look and full and as would it's that pretty do business

Unidentified Analyst

Okay. and And from haven't that don't yet you it? don't it think there the is some to seen you or really on upside bank reform want therefore tax to you

Ware Grove

upside, there's is this early be seen. our a hope we'd at conversations revenue that certainly in Well, guidance conducting of We're and lot stage. into opportunities translating meetings' we're here to yet optimistic, cautious we're

hopefully stage. but to about seen guidance, this So, at as the talking go that be we through be remains we'll year, increasing

Jerry Grisko

now. And it commented, those climate, that we for well I more top generally historicized. our right kind are positive changes, our on to clients gives our as always as put you opportunity signs good very us services and at more the as an talking positive, all which are introducing clients, to regulatory among to some the of small because are I be prospects. are of business, Yes, among for Generally track all published favourable indicators think market that our business businesses, optimism middle

group XXXX. year all we by So pleased we with in for and last are that the equally experienced positive that revenue we're growth very very, very signs, prospects are those organic encouraged

Unidentified Analyst

Got it. Thank you much. very

Operator

hand comments. will Grisko question-and-answer [Operator to conclude like instructions] closing for And we the to his showing Jerry time, I no this the would back at additional conference session. questions

Jerry Grisko

Denise. Thank you,

for I very clients. a moment Before to that serving our in do team thank another you work and for today's the we to members X,XXX take year call over outstanding successful conclude want our

for at As named and awards Brightest to as our Best XX recognitions one most local XXXX. the a we and in recent Companies for recipient and our year of Best the our to We the in nation especially third here local over for work were second row. and that I'm CBIZ, named to company was Place Work honored in to by also Insurance places various The to were proud a to throughout of proud being of in national culture Work Business office. row, the report a year receive many the best was testament many

the Finally, and our of analysts continued shareholders successful and have your another for I'd a our day. everyone year you great look forward and in support to Thank thank like we XXXX. to company

Operator

the Thank Ladies for this lines. attending and conference Thank may time gentlemen, now disconnect your you today's has concluded. you. At you presentation.

CBIZ (CBZ) 15 Feb 182017 Q4 Earnings call transcript