CBZ - Earnings call transcript Q3 2021

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Operator

Good day and welcome to the CBIZ Third Quarter 2021 Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. After today’s presentation there will be an opportunity to ask questions. [Operator Instructions]. is event this note being recorded. Please now Ms. would like to to over conference the turn I Novickis. Lori go Please ahead.

Lori Novickis

XXXX In Good cbiz.com. our joining press posted CBIZ Nine-Month to us everyone release for Conference morning and presentation Relations the Third thank and the the Quarter has call, Investor with website, this connection you quarterly for Results today's Call. been and of page

replay a well reminder, a this archived transcript As as to as live webcast being be and call also the link webcast website. an found and can our is on

our presentation remind found may Reconciliations be begin our conference website. prospects. investor may today's of of the we discuss on condition, presentation, that our also management can measures in Before and forward-looking regarding we statements press cash call release business, the would to including call, measures. financial operations, these statements, results Today's you in financial like certain tables strategies financial include and non-GAAP during of flows, the

be uncertainties. Exchange factors statements to these Forward-looking in intended forward-looking assurance not matters occurred, and and on any have this can inherently no of are Because give to obligation of the cause are statements. date description Securities to as future call that to the and future filings statements the conference Commission. relate A results found materially risks not to Many results. factors such update yet and forward-looking could with differ to only subject statements CBIZ assumes actual more detailed represent estimates

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

Jerome Grisko

and Lori Thank good everyone. you, morning

I of release quarter third our of the With performance to date. am extremely results, proud our

our the of services last of throughout through a that that since third the especially and our clients. given the the onset exceeded date this We and our the the demonstrate strength pandemic, year the performance in many the resilience optimism, of business were in with good results optimistic Our demand deal increase to of level business. second the continued of our started half this quarter from our year expectations. the to with business hearing outlook, and our experienced of we're for has performance Even of confidence climate about year, steadily

have businesses consulting both oftentimes in the strength the for of results These experienced we often is our climate third of that overall strong quarter, seasonal While and business. for core advisory the and we our in continue nearly during strong from groups And in of perhaps our business been advisory by optimism tax this case strong demand and the our service results performance The third saw our this our clients. and of the services core our we services we has Within results most half services our from the some slowness for and strong performance been coming bolstered continued services. through third not first our demand Financial steady has quarter, year. group, board quarter, to that viewed the reflect that year essential robust across advisory current our major confidence project-oriented experienced performance are and accounting, the being as tax of demand more of our all across experience our clients Services year-to-date by the our lines very reflected discretionary. encouraging, from addition, more major many through and practice

of we growth these accelerate for growth advisory on actions our business, us. healthcare capitalize the the into in to digits. experiencing steps translate work government in take a Within mid-single additional consulting clients our should to rate future, As opportunities project-based are

ahead While would A states we growth our expect the is to see with months delayed fully the this accelerated reopen pandemic, in additional experience even made greater since past the of more we administration opportunities services summer, this to resumes. complementary as our growth in is onset bring of creating work healthcare us some consistent acquisition programs. that for value and clients actuarial government complex that provides the to

to and our turning benefits Now group. insurance

the the we that strong first year. experiencing of also performance are We half for continuation the the saw of

& Plan Property continue demand Advisory our We employee steady to Retirement businesses. core see for Casualty Benefits, and

on we've the to employee over producers. business past adding discussed our organic the several within to by number we've of investments prior substantial As benefits growth made years calls, accelerate

results We results are our are today. in impact with of the and area pleased this efforts the evidenced in seeing very that are we our

these results, emphasize retention. to importance client also the of Within want I

sports, continue and unmatched components and are team for that of our industries from benefits business. pandemic. our demand continue hospitality, our our receive in the to described We bring and over how We've XX% value both clients of disproportionately see our production the to earnings business, the casualty during steady like solutions to business levels them commercial call benefits and our group. the rates past we our Within industries. with insurance and in other were some and lodging property retention our and impacted employee adventure to of speak program many of that client for retention the businesses within commitment see These

demand We compensation our is consulting increase recruitment pre-pandemic strength are and return and is project-based to seeing while such The and our trend not businesses for retirement positive. the providing levels, services. as additional market services yet more our executive to the the some lift of investment of also an work, back are in these business

area we softness. experience where continue to some business the payroll Our is one

of will this shortages. current previous business more I business. be on with and employers As pleased smaller you performance of results our we've pleased walk number year to by full position expect Ware to are last turn to the I guidance XXXX and it revenue what of our call, we in that to be we remind we will through continue adjusted calls, including serves we Today, With share during Ware. a mentioned business a our over disproportionately couldn't earnings in labor per our Overall, the conditions, be comments. our that, year-to-date impacted will raised larger remainder earnings raise his that guidance and revenue for guidance. our

Ware Grove

Jerry everyone. Thank good you, and morning

talk Same for the ended for X.X% want the year. for strong. for continues highlights. revenue by with third XX.X% services minutes results months, same the Our the the demand third core and a to grew revenue up last up compared be third about grew few to XX.X% by quarter the by months nine to very and XXth in September to last and With months, I quarter continued quarter for the revenue nine our by strong. with and compared X.X% unit for be year stable unit nine take

revenue our well by insurance seeing unit X.X%. as Same Services X.X% in and unit grew the the Financial third growth In both XX.X% the the Group same Services Financial benefits are for and up in XX.X%. quarter nine was in group by quarter, nine the revenue Group group. the revenue Services for grew total months, as by was We the and Financial revenue in months, third up by

revenue within with and services. We third growth major grew advisory are XX.X% business our service growth strong nine months, quarter unit Benefits the same in within the our total lines, third XX.X%. months, by grew all revenue particularly grew Group, Within the and by and benefits revenue by insurance for seeing Same by for X.X%. grew quarter the and X.X% revenue nine unit across in total Insurance

contributed in With service of results. time now seeing all in and well. slight made the exception quarter our producers lines. this These some revenue are services, investment show the The nine The we first year the where is acquired third to the in nine been that through for has growth last growth newly contributed for are performing payroll year XX.X% X.X% experiencing continuing to months underway growth revenue softness, we to months. positive some we total acquisitions operations and total are

an earnings in UPMC was non-recurring occurred settlement plus June the we second sale impact to million the presented on this that from that quarter. of we $XX.X announced non-recurring a gain an on second As to of year, impact the eliminate earlier $X.X the the quarter divestiture eliminate made adjustment adjustment XXth, million

numbers normalize On year to an the the numbers. our includes we with $X.XX financial release other in levels reconciliation in was earnings earnings abnormally travel and the ago. months, second As expense as was quarter, we third the $X.XX expenses, such the XX.X%. from basis to a cautioned with healthcare year, earlier compared the quarter In reported comments a up this $X.XX required, the for that adjusted this would statements numbers adjusted marketing, per was nine year second during $X.XX are schedule year ago, earlier, discretionary to compared as this COVID per or low margin restore GAAP impact costs a headwinds with began half from share benefit share call began earnings as year. In GAAP line influence our from adjusted

that XX.X% are transactions this contribute years. the As $X used estimated in million on this balance before I million XXXX, health quarter in the ago. a costs, will earn-out basis approximately prior result, margin to a Through very eliminating in approximately September year. payments acquisition of business. the XXX ago. these mentioned, year income nine closed months margin the has in approximately and acquisition in ago XX.X% a year by year, including million Future on closed year-over-year adjusted a impact of purposes, XXXX, year for the up that in reflection third not we $XX.X earn-out of tax declined acquisitions items of million reflection pandemic million this versus an for have is levels to income date XXXX, we on for the a non-recurring $XX.X To reflect XXth, points, is revenue. tax are On low This have payments from million annualized $XX.X abnormally This basis, influenced simply $X.X $XX.X pleased before XXXX. XX.X% which on five a on million XX.X% year, $XX the we at improved

Our X.X through XXth, million the capital also strong that of growth and strategic repurchased flexibility million active cash repurchase shares to acquisitions, XXth, flow, our potential since to through With $XX we time, utilized shares. continuing Through continue a October priority very is we acquisitions. shares. pipeline to enhance utilize XXX,XXX an September additional have we to have to have repurchase approximately and we

result times continued flow XX to a shares. within million year XX.X growth expansion these million full to X.X million repurchases, on capacity. September $XXX was At Leverage we of of with line strong. adjusted As cash was of margin, the XXth. at With million of our a be has and range $XXX.X EBITDA expect unused credit share share September debt revenue million strong unsecured count credit under XXth, outstanding $XXX.X facility

year million to was year the to million. As flow, from this year capital months with year quarter. XX% up of continues million, this approximately that million expense on of Day basis XX XX basis XXth over million million, year spending a Focused at office spending points receivables primarily compared gained outstanding $X revenue days adjusted cash in XXth for sales $X.X ago. spent on may $X.X points debt ago. come EBITDA was nine past facility September XX months. improvements, September was were was reflection and a $XXX.X reflect XX and in $XX through $XXX.X Bad to this improvements with the Full a XX XXth, through September the third between

expect rate either Our rate a that was XX% tax rate number There up or a factors effective XX.X%. to approximately for are XX.X%. range tax we the for the unpredictable months down, impact full can within year effective but nine the of of

to as the compare on to remainder mentioned we update earlier. third and to same aware as of items our persist and of year, compared the our expectations expected for quarter, to marketing year travel year. the and we healthcare year Headwinds with higher that be items you As such experienced the the in to outlook look last of the anomalies benefits, last at and on the year I year-over-year remainder full expense begin levels guidance the are

XXXX. the on year positive in to will revenue These addition, in earnings, In provide acquisitions this midyear a impact and tailwind contribution will services have for year. we consider business very space a in that closed significant growth both significant full several and this operations us financial

we is other and recognizing point the in businesses impact a accruals year. higher vacation levels However, accruals. non-operating of we year, with revenue One slight was the higher typical relieved to out vacation these delayed Last item high as portion year, the time fourth conditions, service pandemic the of quarter timing to expense operating a profitability, throughout are these half the of maintain quarter. with acquired fourth normal seasonality projecting the year. operations a throughout clients expense of newly of in this In loss work first vacation are into the

larger vacation more so As accrual a a significant normal accruals a as quarter fourth in the year, than vacation result, last projected there adjustment no pattern, favorable was expense adjustment This favorable normal there was relieved. followed year is have fourth quarter.

is XX.X%, influenced is full up of strong. course, quarter unique accounting revenue fourth per health this to Of is COVID very this to year there anomaly year With XX.X% business and comparison compared ago. be the adjusted and share that our of up quarter no impact, will earnings the purely year a fourth a

that share As expectations full XXXX we for of expected follows; in year-over-year XX% comparisons, over the Adjusted impact XX% growth projected as earnings balance items are above within year the XX% consider is the Total expected range range in of to is described our per XXXX. $X.XX the the recorded revenue are unique over a XXXX. XX% earnings share to to of within a per growth

performance We a rate million effective down, full unpredictable expect I extremely expect million that count year Despite this considerable this healthy, ahead. within to growth impact factors impact very XX.X%. tax year, the second pleased weighted Again, rate a described of but business year. the either we or headwinds XX range within full the the we the and up a of And several comparisons average share XX% tax shares. range are a can the to is business as half there year with we are of look opportunities XX.X

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

Jerome Grisko

over turn our Thank it you, Ware. on activity like touch Q&A. for we M&A to I'd before

recent quarter, revenue momentum we've closed five already that annualized seen As this in XXXX. we've I discussed history. last nice will we year provide with the contribution year from M&A into that our started pipeline the strongest The this transactions going

we including one a to for there's opportunity year-end. of addition, very have some transactions deals, more to pipeline, In us and or still strong close larger these continue before

cultural SLD the always Francisco, privately advisory Coast of are early like part the nonprofit Mateo, SLD ahead, to has a talk partners Coast. the San Moreover, valuable about and to based of of fit complements our find share that in our strong client and the service to existing commitment footprint alignment bring greater over visibility working and more, a and growth. teams, and we adding even scale clients, geographic growth we businesses, team. held and In serves recent Labagh on an Francisco, acquisition on West across while and long-term accounting, September, This to While core growing organizations California. it our of to firm Shea most our brand we Area. capacity to will this accelerate I'd together boxes take values. market. Bay group San Walnut individuals, I moment increases the and turn demonstrate this, West to offices completed is always our and looking to our Q&A. seek join we these San and for services acquisition Creek, our SLD Dobberstein, look in in forward value With checked strategy to and tax all

Operator

from Please [Operator go Instructions]. Chris question will Securities. Moore first ahead. And come the with CJS

Christopher Moore

morning Thanks of for good taking couple Hey, guys. questions. a

be continue you X.X%, there? next driver over growth relative -- contribution likely same-store B&I, nine more financial to or the be financial few up months, become up to services the same-store So key X.X%; so to services, to do years the the balanced expect growth for X.X%,

Jerome Grisko

is is of favorable for you I what types So that's very generally. Chris, are What our this businesses benefiting, are benefiting business would how today. Jerry say today. both business experiencing a middle market really small they're both And we're climate from

little extraordinary things. the predict outlook organizations, the of driven subject two course, and really business a a than year-to-date financial the continue of is we of to expect quarter coming Part result we between amount reasonably to advisory both would growth of facing. favorable see growth transactions of be of as the of continues, would through to stronger the growth clients, continue rate services As seeing practice. is our and them hard areas. that that we to couple to that to stronger in But be those expect growth. And the if The is that other, they're in wouldn't reason strong, environment stronger the of say we're to third that those one by a activity I largely it's would in our different for

Christopher Moore

Got it. I appreciate that.

COVID EPS recognize XXXX of growth XXXX of the this considering job going the is understand catch the still guidance, We happen normal that's And catch-up trying providing in of So following of versus in good the on What second in expense still for amount just there you're half impacts $X.XX, obviously, side? expenses should the of kind range the meaningful to be XXXX about a XXXX we lower XXXX. year. adjusted $X.XX talking did comparison. up to year, the I not well, a

Ware Grove

a look a normalizing expenses you half lower a to Hi think then nailed It's XXXX. at the kind they're XXXX and -- and when Chris. bit this first year, Yeah, had it. in is you I half. XXXX complicated second this of We flip of versus but analysis

lessons the X.X% to think, a XXXX run should going it's in, of be entertainment probably service virtual year, we've I think again, revenue, and than that we and year settle this and that's been okay. beneficial these travel higher as settle component slightly year-over-year all for Having of us will in that see revenue, transitioned historically, a said learned closer the long-term trend. sustainable, expenses about that, model more full rate of yet you should that's some So comparison in to X.X% of to a the to

healthcare at probably The of course, other will historic marketing of benefits probably expenses stabilize rates as historic stabilize and at will and well. rates

Christopher Moore

helpful. cross-selling revenue terms core mean, very picture, me acquisitions I prospects question is view $XX core more relatively do got grows you year I understand That's better to and other reasonable in term? of you example, real little to bigger in trying revenue, And the of it opportunities, guess XXXX I for think XXXX, acquired level how don't recent versus a kind quickly a lack of given the a of the for one that for growth business, in revenue of know, create revenue kind and potential, of of just the full high than XXXX of if kind million last is leverage acquisitions bit

Jerome Grisko

Yes, Chris it right. hard know, It’s is to as Jerry. you it's predict,

we that projection but continue were come longer-term X% organic and in that given range about historically is from in it's half acquired. much the that comes how any Our those will of that half in will about grow year, form growth and that organic to the for acquired. We ranges to of in to come predict XX% will versus of difficult

given the at pipeline lead predict. year to the that difficult could being the higher encouraged year, that the the in I've and pipeline, and any throughout and we're of to very period time, end mentioned our end acquired of revenue it's transactions of but by are those As last ranges of this very, really size size our in of really

Christopher Moore

right. All it. appreciate Got it it, guys. leave I there. I'll

Jerome Grisko

Okay.

Operator

[Operator Instructions].

Please ahead. Sidoti from Reddick come will go question next with Our Company. & Marc

Marc Reddick

Good morning, everyone.

Jerome Grisko

Hi Marc.

Marc Reddick

what all So Thank the first about was could thank the about great. with Day everything Investor to I you for always that seeing the the today a there's historical of little sort wanted what talk today which ask pipeline acquisition bit what marketplace, at really that little seeing all, that if of if from I want for you're came compare in you've a to commentary and maybe that. wondered today you event, maybe and contrast active to you to been sort the the you're a environment and way is historically, bit -- way -- I acquisition opportunity of looking versus like and is compare there versus some you're because maybe maybe precedents? quite a

Jerome Grisko

attribute pipeline Jerry. is Marc compared couple we today that Yeah, say things. would a the to to COVID I is of this What fuller, to prior is and would

of accounting certainly, offer that somewhat now importance to on side, all, making been to changing of environment and the important services breadth firm's First within that them particularly and business, into back and recognizing seeing of investments that require time, and for going the tax are advisory years. investments those accounting that. some is traditional that depth -- are expertise for the doing side. several are a the over firms the Others it's We've

and they So committed those themselves begun that ours, their join do making make or decision firm already a they to is, like who's have investments do investments those process.

So the well our accounting very of firms with story space. the on resonating is many

And and the uniqueness it's many The the our kept strength that weather thing supported members of that that of other in is sheet, just of us, other our different how the team it's think, many period than not ways, to is shined kind of throughout of ways on staff least I that the and our of storm financials CBIZ. firms the balance light better allowed we pandemic our which of the in strength time. the

of that firms. we steady long-standing And they all of those kind resonate that, would the so is our have, of value going values the And business with lastly that the culture and forward. and just that them understand performance our which bring to

much a getting prior so years we've result pipeline a audience, many more of as seen that's receptive very telling a in led this. to out, and than that fuller today we've And story to had

all changed services the a be, and and payroll retirement continue that's landscape private the certainly landscape plan the There and side, on the On has space. will insurance side think equity remain benefits of the as casualty, very opportunities opportunities don't much, some side. certainly although competitive that's benefits the been, other in has and given side, that insurance business, the I to and within and activity is, property well on

today. So the that that's pipeline have really what's we leading to

Marc Reddick

and a creating sort Thank you that you clients back go prepared color high the of Then gears post in sense -- believe, you. or the pandemic activity Thank now is switch we may I I one could sense you area a as on for I a what a stated with are so, are to about Okay. getting wondering some being that's of the in or making -- a in talk those it bit. coming wanted what I level if was wise, little be about to was remarks, your level there. retention you How seeing should if is you of XX% you're out you're as retention you could seeing that was bit of that of getting how the in. of are if little there maybe have opportunities, expanding. a think cross-selling folks worked about how wondering mention pandemic.

Jerome Grisko

do Marc. think, that our a question goes to track have, we us clients. really of retention value pandemic learned clients through to have and through thanks, I we the Yes, The the clients goes new is that unique things, it our allow proposition ability what to prospects the to And both. we and to two

breadth think, were of the depth they is a of So, as some our of uniquely able be of result in to challenges I unmatched, in clients, front that opportunities facing of them the our were our some help industries. we and positioned I really them which expertise, of think to services the and the understand our

much, through our success or as so we of ours our those in webinars, who Likewise, beginning had not solutions, those and And prospects the to clients to that through ways leadership, but searching were analysis we many we previously early were really digital great them those really the we value many brought thought pandemic. that channels able of clients, others when able prospects in great had stages thought were clients. to solutions, processes, aren't through for reach bring explored

into outreach We allowing in the continue success to helping to have is us. growth fuel our us that and digital also great -- prospects to to for market,

retention it tool, us. for opportunity only not it's is a but So a also growth

Marc Reddick

what And next that covers been question. have my would

there. I Thank So leave will it you.

Operator

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

Jerome Grisko

This marks celebrate an as you. month important for milestone XXth CBIZ we our anniversary. Okay. Thank

XX has XX become of Over businesses across advisory providers our of and professionals country. of insurance, other now the one XXX in the last over over with years, clients team CBIZ services X,XXX financial, offices leading We're network a and of to a the states.

the of those For we you how was month, history Virtual founded featured last the us how company Day video evolved Investor highlight -- presentation who joined of during Investor brief and our a to we've over time.

express our are close section year possible the and view changes investors performance exceptional it from and the to on we and dedication to we've I your our enjoy growth our in reflect to team. the and to want of today, and got cbiz.com, website, that of the their inspired day. and a tireless always find this we've of learn a here to, about that continue I how results start I'm our I adapted the as more outlined and our we past thanking the of our and If want had for to gratitude all encourage presentation, clients our Relations our our extremely challenge. product is Investor to support. we to take team team. this opportunity an you you commitment you'll that to moment haven't only by the of continue XX achieve plans pandemic each proud what to Thank your continued for other. rise today we've analysts future. finally, to and by together, our And you, accomplished to the because When The do how I'm I members months

Operator

concluded. conference has today’s presentation. Thank you for The attending now

disconnect. now may You

CBIZ (CBZ) 30 Oct 212021 Q3 Earnings call transcript