CBZ - Earnings call transcript Q1 2019

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Operator

Good morning, and welcome to the CBIZ First Quarter 2019 Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Lori Novickis, Director of Corporate Relations. Please go ahead.

Lori Novickis

Laura. you, Thank and CBIZ everyone, for us joining Good Quarter thank XXXX the First Results for morning, you Conference Call. this Investor our In posted with call, release press connection has on the www.cbiz.com. Relations website, of page today's been This call is webcast. being also live website. A our as the found as replay link webcast well also can to be the on

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

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

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

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

Jerry Grisko

Same-store margin you, ago. the first revenue Thank we of and everyone. earnings Good point basis total grew results the and our release X% this period a over year our a pretax by income per improvement reported reported same share X.X% in X.X%, growth XX quarter revenue increase of XXXX, for results a for in Lori. of our morning's morning, the quarter. With the for

EPS XXXX exceptionally the in over CBIZ of understand of up XXXX. period quarters. that first comparison, quarter helpful was both than To below that and somewhat internal anticipated, quarter-over-quarter XX% softer growth it revenue While quarter it's better recall significantly for revenue our some Many impacted growth the of to compared same was XX.X% the will wasn't expectations. the to an of with review total items quarter for the strong you

factors, the results of resulting within a Financial for significantly quarter we a time, ago were at in that from year. third by the said we revenue work impacted event Services year prior to Irma, nonrecurring an the Hurricane quarter recorded the that carryover As including first that extraordinary occurred relating of group our number

from We business. revenue noncore real transactional of benefited a executive higher-than-usual also a our estate number recruiting of including from business amount businesses, and our advisory our

addition, small a revenue year, first which of we contributed accounting our this as any all quarter quarter the In at year. contribution segment, in XXXX sold book business the as Benefits small in this the to of beginning one well of office Insurance another of with of XXXX, plus first and in without

accounting by Tax this prepare to This in entire just tax that we XXXX season and changes factors, as combined caused government the for have for of first federal quarter. the were weeks that forms the Act. in occurred notably, of X occurred the factors first the law, favorably expecting number year. third-party to the much read were December-January, quarter of shutdown the Most estimating the impacted delays the a the many caused the be of reports compressed late relating past software entire I've the tax issuing amount and that the Those clients. were our significant industry, to that of tax may availability for with certain IRS the this returns not guidance new used the under of partial of by reduced delays as there While CBIZ. revenue of impacted in results XXXX quarter that foregoing the been number performance that Reform

of reduction of able greater to filed. in were prepare and the returns a caused number the tax increase this even that we number CBIZ, For in that were extensions

first related quarters the as revenue this the in work the and normally result, completed of work is to year. the third be this of were first experienced report we will which in As recognized in first exceptionally level the second been of in strong extensions, a that would quarter first growth year tax a quarter have Despite quarter, XXXX quarter over we quarter, reduced and recognized that to experienced tailwinds the the we pleased of the an ago. XXXX

X.X% off-peak clients our accounting favorable well by specific year. work months by remain to some optimism by that XXXX. within which revenue increased we're groups. the the to strong Client for Services will level This tax many accounting earlier. two bode practices healthy revenue impact encouraged Within turning be that business, I we grew two Now our of of our climate business for same the of Financial core the the and the practice continues of X.X%, of demand small should in within remainder seasonally mentioned reflects by a and consulting our primary provide and unit of of advisory clients level group, to sale the comments and the total typically our

demand services to in and be area. Advisory backlog our have robust of for by the continues we addition, that provided a significant work business In Transaction Financial amount and

have care this demand we We high single-digit ensure staff health experienced to rates line market working appropriate continues and well. grow And is are, that that business government our client and track at success, consistent of consulting some we're services. area, however, business in high these experiencing the our to record labor of with meet number long for performing to tightness hard

unit X.X% Turning revenues to our Benefits declined X.X%. and by revenues by Insurance same group. Total declined and

As unusually business XXXX we book part business first the XXXX, that but quarter the our in from the in of high was received noted the and same by quarter period the for in executive not results first revenue comparison of of sales to of recruiting that affected small earlier, contributed in amount the XXXX. the quarter-over-quarter of

results we businesses ultimately from expect for are generally first number year growth not of line in the this the of quarter of the that we this are yet rate with expectations. While group, achieving a the within

all businesses hired to Revenue equal or of three the at within is that improved businesses, expectations. four retention our employee over production core up property year. casualty within client are the producers is and service new same we've that businesses group, and and in outperforming four recently last For generally the four comprise businesses period the the lines this benefits our

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

Ware Grove

coupled quarter we good and level end at not the reported that year-over-year of likely exceptionally Considering this year, would XXX revenue year the our Jerry, from loss impact prior the strong a the in of of that first growth achieved, of XXXX. impacted year we you, first guidance consistent Thank approximately compared revenue effectively the have the the reflect we growth neutralize of for with expected by ago, in full the together our announced strong results year transactional businesses everyone. performance year. XXXX, divestitures quarter in first the otherwise the basis divestitures we morning, the growth with quarter with results total The the is with last year would points this

first Considering are XX happy basis points in year and is XXXX healthy, affirm growth quarter and the continued report Our the we're making a guidance. ago. compared we a impact we the with are that demand to client we year with full of investments comfortable increase business, want of to strong our business targets is margin

in group. continuing producers our a new business have investment Benefits We within and Insurance

many levels. a generate for time production as takes target newly effort business to to this ramp us you to understand, As hired of is new it multi-year individuals for up

cost half incurred second margin the quarter in hiring and basis into of increased approximately first the impacted continuing quarter first the With the last year, by incremental XX year points. this

Jerry client improving rates. we business commented, performance Insurance first the within to our year. reflect stronger with expect we and of production trends and As by end positive are higher the And seeing Benefits retention quarter

cash share issued noted the quarter the year XXX,XXX at seasonal quarter, repurchased $XX.X And of as of been flow morning, first level And first Through With end year, to X.X we the As our is approximately end April the our at first shares this the cash for of stock use XXX,XXX we expected. of with was a approximately the through of XX debt in release cost EBITDA. a approximately quarter, times at in million. business repurchased this the the total repurchases. we've trend have this common active shares.

acquisitions. to Our use strategic capital priority borrowing But $XXX continues towards nearly million an repurchases. continue capacity, for flexibility of unused with approach the share be to to also have active we

payments we year $X.X to our on $XX.X the average full as earlier Now first million, of $XX reduction million recent diluted for weighted within used slight year a a million and cash share activity, share XXXX expect of this quarter, repurchase of is fully from In approximately result acquisitions. range we guidance. a count

year the XX of year. generated tenant occur For $XX largely the XXXX, next for by of XX our then as first on million; approximately of quarter was the we this prior day related and moves $X.X compared million; approximately driven days $X.X remainder for causes Remember, the for at the first the business the spending sales and ago. a outstanding seasonal year use to first and year acquisition-related a approximately costs. receivables million; was nature quarter later this with the activity and revenues sales payment of half payments, billing XXXX, the in XXXX, in of year outstanding build-out year for Day $X.X year, million. approximately end $XX.X forecast Capital rise days in with in million, facilities

we equipment. are In transitioning lease some rather than to purchase IT addition,

spending a compared basis activity in be And project quarter is XX%. and impact CBIZ. losses $XX expenses impact improved XX, in impacts compared of and and earnings approximately this administrative the year depending was million. balance in a lower expenses, full XX a with for of to due million and year the either to full $X.X And tax impacted investment by our gains plan. for capital to continue see release. The X% the year general accounting technology compensation-related you'll rate first and gross this the As that the Eliminating with outlined XX.X%, have At higher million compensation the on year. this GAAP result, deferred and expenses of assets and be prior X.X% subsequent systems points compensation compared accounting tax The stock general ago, year. ago. the quarter the expense rate effective was rate stock revenue operating And by over of for tax of a approximately reported will in you or we with this we reported first a could gain and administrative primarily I this March of plan margin accompany from significant results. of we year, expect want notes and of that year $XX the approximately remind

As But asset impact on flow balance right-to-use full earnings accounting quarter payments. XXXX. is up, availability. want sheet that a impact adopted note I new or value the we you will issue present There the by balance nor for is XX-Q upcoming to January there filing, when is cash any offset to a X, future a credit heads first at to we lease credit our that agreement or liability in standard lease find a our sheet no

Looking year, the high care are for continued rates. grow health of to balance and ahead expect to we demand favorable at conditions consulting services. strong continues business single-digit Government client the

Our services. to for demand continues financial business advisory see transactional robust and

with IRS be softer regulations in expected result tax filed in done larger delays year. work number later this a quarter of work date, was First But will as than and extensions the guidance. a to of

of of segment trends revenue business growth our through expect new result we Benefits within Insurance balance investments this we producers, in making a the year. As improving the are and

guidance. to So full mind, I year with factors these in XXXX want recap our

We range within to XXXX. we expect X% $XXX total over in of the reported million growth revenue a X%

for the XX%. will We full approximately be rate XXXX expect the year effective tax

rate $XX.X again, The lower or activity, first rate compensation now XX.X%, to recent year year XX%. with was full for factors the XXXX. tax weighted compared, the a repurchase of shares full be sorry, year quarter our to higher fully million impact XX.X Considering compared of but expected And could share number a cause share expense, year count expect within million effective average stock I’m than [ph] full range either estimated a million approximately diluted full rate the of unpredictable estimate. shares, is we of estimating to continue the $XX

per the earnings than in range We expect a the higher year XX% full per of growth XX% share $X.XX full XXXX. we share reported within year to for

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

Jerry Grisko

to approach like take discuss to I'd moment Ware. a Thank you, and growth. investments our just to

and We long-term organic that results acquisitions. growth embedded continue in organic fuel significant technology, marketing to we to believe that in the invest perspective, in of an people, it's will growth are investments in our both the and important From believe and short- company. processes

of to list the too our assist group of and quarter. XXXX, acquisition are Financial and flexibility sheet offices end cable approximately other million in perspective, cover technology call, Tax revenue. we our that with the better portion capacity within producers most that those three credit service long best-in-class with launched our From the that resources include Benefits a closed the the on While contribute to Services platform mentioned noteworthy our us last clients; within for and a to this group our In and national the to have we our Office provides of on higher business. of that our annualized Ware our national a favorable of is acquisition strong program. some to our earlier; This unused capacity borrowing first investments facility remains leverage additional provide campaign $XX transactions national level continue Insurance of our $XXX approximately to the a an and investment continuation expected we continued resources television of the year; branding million balance to at new strategic National

acquisition we've one So contribute $X.X closed far annualized to million is this expected additional to an year, additional that revenue.

and three is companies to fits be we contributors difficult various for stages strategic we precise closings particular are to success. conversations transactions timing to any What to is that may our the that strong optimistic very that targeted predict it remain I closings. we year significant pipeline would we can year, our high-quality say of that to close very very this that in occur of those number at a number continues with be and While will the five and strong long-term of of

the Turning of forecast for to our XXXX. remainder

I'll quarter, While the track the year project-oriented going on we we services for generally to full it turn work types is the metrics for other to seem the for of business over we'll we provide discretionary indicate that and the favorable year. that point, conditions that hit of this year to first to experience and we're the remainder continue more to previously Q&A. that established on far reliant information that guidance the remain track than At

Operator

And our from Instructions] come of first question Chris Moore [Operator Securities. will CJS

Chris Moore

with just Maybe to stay M&A just for a second.

point at get can't looking characterize might of the specific, kind on of this how ago, but you would it know kind I smaller too and a acquisitions, So at just range in things types year-over-year pipeline of consider at looking are things what's on time years it the the this you're the most size basis that you two or in of time? of versus the

Jerry Grisko

Yes.

So let them order, answer Chris. me in

not heavily the transaction intermediaries always the internal the external resources, that also engaged had to resources, engaged we've business. those more that result as today past of years pipeline the robust, and to a us, We've we've opportunities both if couple have transactions. Insurance robust the some that's sourcing of with least and of had over is on the the types principally third-party accounting provide resources and Benefits than business of that at First, committed we side we've we've

of a all those larger at us are number XX have combined maybe going have than or things months. XX allowing think looks I we of back transactions to

lot reasons. across the rate expect said, look mortality that many that that of we're for a there's with a of as we pleased transactions amount deals transit. you to are would at So the coming With high

As I a far size are of it's will that transactions the tell concerned, mix. you the as

we we've having advisory just true been than On with practices types side they've and size both the on holding time, larger larger historically tend on of this accounting discussions firms of seen transactions the traditional in see we're the the are of the business, many to larger the accounting that's that past. transactions and of at and

very and fragmented. industry we've On side, with The seen. what Insurance the is Benefits consistent it's

firms a to that lot You space, small mix and of see are transactions. see of in transacted tend same we brokerage that that

Chris Moore

Got helpful. it. That's

and of part the Benefits onetime -- likely QX, happened X.X% I look of down you Insurance mean if in that at organically? some your kind growth for the of On 'XX in to was still fiscal marginally do 'XX. of that guidance, growth the of the in is Insurance? assume sides, is or flat down things was Benefits organic QX it and kind mean reasonable that year, you I be

Jerry Grisko

the think we year you're Benefits for We relatively group. for and on, No, Chris. flat -- think right the Insurance

we've in up kind of our notes that producers, in times year. last the ramped that in second investments commented couple substantial of a we've As made half really

sure filling in to continue make the growth for see pipeline of but that half We that as we're us that year. We area. that we of in a division relatively producers the to from start expect 'XX, would latter group total some incremental flat would

Operator

from question Company. comes next The of William & Tim Blair McHugh

Tim McHugh

I you've to, any work tax that you quantify guess, And to for unusual period, been and of can able size ago search numbers some -- revenue just the was I the to sense? you remind possible it's if of wondering the of in put us I in deferral was affected if the kind around year growth? type the executive factors also, guess, how

Ware Grove

This we to mid-teen track Ware the extensions Hey, things compared Tim. range Grove. the into and hi, up is these Yes, number was of year. last

and the be a done. smooth nice a not point disappearing. think is and guidance, what actually here XX and not bit in also And second good It's generate more we a occurred. points or that peak our kind probably It's of did because can had basis the that's to revenue year. X.X% would year-over-year, delays do. the and thing otherwise this try the lower that not quarter revenue and we we revenue third we that of work than will probably is was rules it there of We impact reported on this always So But thing have that's and work year, basis XX regulations insignificant.

and the search was impact. on question the Second executive

at first look X.X% negative the for you the B&I on if reported side, think -- I a impact negative growth organic we quarter. the

the organic that If if you down, you Insurance, approximately B&I, keep that flat year-over-year, and X.X% would impact. down, executive helps out and X% that adjust have Benefits not kind piece been of understand search growth

Tim McHugh

guess for revenue Okay. progress, -- as basically the is Insurance And is, thought coming? you question several fast any retention the coming X% that. like seen you I I we've I evidence new some down you'd that productivity hires really would from down to better. as more I impact, I as what the Is quarters. This of segment. guess guess I But said the understand signs I it number. There Benefits it within seeing maybe that guess, you're the but would be have coming X% thought -- I mean are progress guess, of see that last seem is doesn't on had have it would performing what, some and

Jerry Grisko

answer is, question fast it is as coming we as is would expect? The Yes. The yes.

as is quarter expected. first performing basically The

that we have that scrabble year But that talked conversations things do to steps, And we're issues. get the in that latter first I are the beyond making control the we performing have this within year investments, out on people also of right There I the our the focused may last anomaly the business faster right there. we expected amount of can in like how year. the bolster if we've numbers, I received is first we're are group. see would frequent to think as right quarter. quarter impacting think kind we of part of the I we we about the think and that's you think the didn't income there in going progress improvement But We, taken growth about of course, those unit the numbers. to was one see a was right contingent not of start the that

Operator

come next Sidoti & our And question of Riddick Instructions] [Operator will Company. Marc from

Marc Riddick

any to of the impact well wondering impact state if any Wanted we're that any seeing on on you're kind if of filing across basis on little was extensions part just local customers touch is a the bit residual and of it as the if mix or that types particular board? there whether I of tax of kind follow-through was is of extensions? filing a and it there

Jerry Grisko

Yes.

I extensions. to a question, first the impact the knowledge and local was state as Marc, don't of particular of whether have So there really

a an the There delayed least significantly section one, really, with have do the lack interest. we regulations particularly changes outstanding. think, partnerships, small is calculation were code We the more The of that the an the second that real interest, by Again, XXXA estate on lot so regard limitation to impact limitations work, The the were is calculations of energies. do that entities, that pass-through and guidance made et all pass-through that interest borrowings as and pass-through pass-through of impacted in was awful calculation, a and as cetera. lot I impact businesses at did well at it code XXXA.

answer So I mix, guess. a the is

Marc Riddick

demand like. may from had kind greater along you I have lines from local certain seeing tariffs thinking pass-throughs was several that the any I'm farmers, impact types wondering last a months? over the may okay. then was the about have Okay, on impact just businesses or tariff that Great. of if thinking impacted general but I of on are And been of

Jerry Grisko

Yes.

the quarter ask the of quarter year. to sentiment those the the them, to as call client every general and for and questions prior at anything kind rest sentiment, whether for their of materially So, of end impacted we Marc,

heard the any asked about. were materially you've our not have of clients in impacted that that We areas

Marc Riddick

part going. you where could of little of I know fair. That's if thoughts bit I update I a to -- wondering then national And advertising of give bit an was was update you're Okay, give things. can you as if wondering on you talked a okay. the about

check see year? of you think to of could last about I think remainder this to we an was wanted update on quarter, just the sort there touched if that but the I for

Jerry Grisko

Yes.

objective is is obviously, of that throughout for surveys results So brand have -- the to awareness brand the the do the when brand We to survey, that our will campaign. of brand at reality I our the increased nicely increase campaign that awareness. there from is and we we had campaign awareness beginning started. but positive survey low awareness the

continue What's So of to last those another with is consistent had that continue a to flights need in improvements, had this year program. we two on market. required throughout plan -- make strides continue year. flight And have campaign to We've the the those the make with approach there. to we year. us continuing so for, far we in strides order We to that we

spent So dollars this to that year, the that last into spend future. continue have we will to do again and year be the expect -- we

Marc Riddick

may this be but bit of one given a anyway. and guess, a I've then -- a shot And Okay.

you've there as you quarter. yet? beneficial the second versus to might the that, well, benefit for do do reason get the of second concept you might of slightly sort on a maybe have opinions be third of and or mentioned more believe that smoothings a Or With third just quarter be that that quarter? extensions, the to the bit Is okay, -- any there -- of

Jerry Grisko

It but what second have impact -- saying don't now, in the nicely, to going like right We we're Yes. and come will quarters. just we for them visibility that. it's both a have don't as really should feel to It's third. impact a

Operator

session. to any [Operator for remarks. Instructions] concludes turn question-and-answer I like would Jerry the Grisko This back our over closing to conference

Jerry Grisko

Laura. you, Thank Yes.

year may who the top the category Professional Consulting been we recent awards Midsize to of and Places Services to again every among Services thank members XXXX Best not of on of and among Fords just come to who to Fortune rankings the Employers X,XXX market the our received For recognitions our in add Work. latest work those news, XXXX seen nearly phones as in members industry I that To and of To local Great who make once contribute are a Workplaces These Best Work in team Best were culture XX we've by list Places each that want that this by awards long these Magazine's Magazine. the we've and day have team notified the recognized Professional the possible. similar for

and in to are analysts there's to more in close talent attract important I'd for best ability than our and industries. culture the our people investors retain thanking quintessential We and nothing like business and our brightest our and by a their the and you that best-in-class quarter to report support clients. exceptional job to Thank have do members providing the team our again services for after you, continued look second and you in we nice our day. speaking to results. We forward our

Operator

The conference is now concluded. Thank you for attending today's presentation.

You disconnect. may now

CBIZ (CBZ) 27 Apr 192019 Q1 Earnings call transcript