CBZ - Earnings call transcript Q1 2022

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Operator

Good morning, and welcome to the CBIZ First Quarter Conference Call. [Operator Instructions] Please note that this event is being recorded. I'd now like to turn the conference over to Ms. Lori Novickis, Director of Corporate Relations. Please go ahead.

Lori Novickis

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

being transcript call the can made will on also As found a An site. webcast and is be reminder, link webcast, a archived be our this to live replay and available.

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

estimates Financial relate description to and Chief Today, uncertainties. Executive of found intended Securities remarks. update actual Forward-looking the could and subject I are Jerry? statements forward-looking Grisko, his to opening President statements. joining now call to statements no and Officer. that Jerry statements Jerry Chief of will materially, to call A over Exchange us filings Officer; occurred, with are assumes such risks cause any detailed inherently factors these Ware call these factors be Commission. our turn not obligation can future assurance more and give on for in the for the Grove, represent to today's as and to differ have not results to and CBIZ Because are future yet Many only date matters results. this

Jerome Grisko

everyone. Good Lori. morning, you, Thank

discuss passed XXXX discuss life recognize share this results honor the week friends away and so quarter a our did of opportunity on take and were former life performance gather outlook and we and to this impacted CEO. year. the a illness. are to our pleased for our But celebrate I We morning, legacy to Chairman to long-time first before Steven We Steve want able to to all remainder last of brief after and to April our for the people honor family that Steve Gerard, L. the and his Steve's many CBIZ. knew that XX know for Steve's at could that when to Steve the a joined leadership critical critical we XXXX was foundation tenure, policies the juncture acquisition. to of vision to us approach through contribute for are the company the become impact I the call company establishing what the many and and CEO people to of our to and putting both during in were pragmatic experiencing of CBIZ scale to and growth in rapid success that and place on this understand enable Steve as on today. his company CBIZ with Chairman. processes

us. around our mentor to the team tenure this champion as CEO, vocal programs power value tremendous a remembered continue those and people, based who on deep by of culture shared importance for stock XX%, for a and others to all his a a give and reach nearly initiatives our and to but development and to as Many our day. He heights. be him commitment success greatly credit During for who professional established missed increased will of He even and quick that of only revenue greater to inspired XX-fold. Steve CBIZ was the Steve leader, by not was will enthusiastic CBIZ held innovative, grew values. be friend of the on

this Steve's as you for our first with exceptionally strong quarter we fitting legacy of feels it the that performance share So reflect only on I year.

a historic was As call, we last CBIZ. year discussed for XXXX during our

growth, As a our total XXth and EBITDA. with as organic for sizable increases we revenue watermark a in EPS our revenue, performance we celebrated achieved also adjusted company, high anniversary adjusted

Our full major year growth in business. across service the from nearly XXXX came every line

to to I'm proud was the build year XXXX for we're momentum, just goal and this and strong very on that doing start to Our that. report

first the total over growth revenue was growth reflects For up our across service lines. XX% all major quarter, and

and In that we're is support teams the our addition tools more advisory with the we've many processes, pricing, of engagements. central services, for been strong of seeing our in our which group, continued to are Financial tax Services advisory making and more traditional strong investments pleased result for our demand for just the also season in and traction pricing to systems client and profitability our services. project-based accounting of demand busy report Within we completed and our that services

often the projects. somewhat On view health within climate. opportunities demand a current business reopen provided experienced slower and years. have in seeing the call, we experienced impacts some future to as COVID-related to when down this one XXXX many were the that by our businesses compared capitalize for care areas highlighted I and, This today, consulting advisory slower where limited our demand of business as states XXXX we into prior our cases, some growth While is completely services, in government we delayed of no of to slowing are moving only the quickly on we're last signs of as the

some first these a of projects. began with see number of projects some of the catch-up and quarter, to the For launch benefited also new we kicked we from delayed off,

momentum normal predict seeing cannot this extent resume will our we're our which we demand continue, While increased overall, for to more as clients services the operations. government

Employee off division. Insurance organic Benefits and and growth, Insurance Employee historic of our our Benefits by we this business, Casualty our have sales, and year Property service positive lines. Benefits & our to retention Within to We high driven revenue with rates trends. client kicked continue turning Now strong

Insurance is Benefits rates. pace. Services Property seeing and for the complex to payroll the our Specific lines, our anticipated, the compared record that service larger with the by sales growth during we services impact business coming Casualty pleased our payroll The are reflects from high we digits. first our posted approximately of payroll growth the some retirement to more serves more Employee & first producers are year. for clients with quarter business, low-single As to addition demand and needs, of Similar our growth more XX% continued also upmarket investment wins is growth strong the significant to strong last organic our payroll, also and platform Within continued on see in we had quarter. clients retention

completed ranges the call our of months. that more One to from to acquisitions year past volatility the division, Benefits and strong consulting for experienced, and want they make last while such a high our Insurance year, the Similar Finally, on we we and demand executive caution businesses, do search compensation experienced are small segment as of our our of advisory our reaffirm quarter our also up the part pleased significant results financial than project-based at we in business. only in are expect the February. quarter for I full our Based through quarter momentum to end XXXX. that outstanding provided pleased business guidance the this a strong Overall, to final to very of coming the the note. first number ability off we with performance, the we performance our to on historically capitalize and on XX due in we've of in

financial quarter year prior more for result, the it in period the any performance I year. would I'll comparing a Ware advise our turn over With As this to Officer, details same on to given Chief specific provide our against quarter. Ware? Financial this, the first Grove, to

Ware Grove

Thank you, morning, good and Jerry, everyone.

the XXXX, first a Paneth The into first XXXX. Let in to that the revenue contributing in you. me strong January financial Financial over increased acquisition the growth Services, our And prior Marks XX.X%. by highlight total first X.X%. increased take $XX.X across the year has up or quarter. by ago. a million on XX.X% private advisory up by revenue clients. year growth same-unit revenue quarter quarter quarter in growth this Within Acquisitions a XX.X% solid made consulting, first with compared ago. and contributed closed quarter year-over-year to results $XX.X focuses The a major same-unit revenue this We year we business Within numbers Insurance, first in year, of same-unit to minutes Benefits above reflected significantly, healthcare X.X% areas ago, plus increased with all a growth year that in are momentum growth. government equity total by million growth acquisitions few revenue for Total service including component with within strong with particularly was X% services, continued experienced up

a Benefits a reported we and in a operation. quarter the ago, As second year divestiture the of reminder, Insurance

across grew producers and we been provides same-unit between the recent the within difference the within for effectiveness Insurance. Benefits growth accounts Same-unit service transaction investments total of that lines that this Insurance in revenue year. revenue new the years making in and and long-term Benefits of and evidence of have So all

As represent will to transaction acquisition an of reported adjustment the to we Paneth impact January go and expenses Marks integration XXXX, of through related GAAP the earnings.

XXXX January, in quarter, from G&A category. million outlined Paneth that are there an expense the expectation within reported are expected fees negligible. would one-time call due first initial investor earnings to $X.X reported GAAP in year the we our During Marks to of first contribution transaction-related that costs, be approximately In our

is release, expenses. integration In expenses earnings of reconciliation adjustment that reported In first per quarter, GAAP the impacted addition, and the by these a reporting there operating per of to are $X.XX adjusted are share primarily earnings margin share. numbers points $X.XX. earnings million XXX approximately within non-recurring by per costs reflected share and in impacted $X.X basis This outlined other

CBIZ. we track. We will expectations, through happy and and efforts Paneth with provide throughout are efforts join in have as progress integration the XXXX, Marks year. ongoing are we the results will Initial to continue on line visibility these to costs are to be very Integration team

that and both as we during Beyond a of such and in similar remember fluid the normalization half continued marketing, and the at throughout healthcare to pre-pandemic costs integration levels costs, these second impact non-recurring margins. costs, to XXXX, levels fashion pandemic travel benefits costs that close outlined costs of acquisition to continue entertainment, year. normalize and healthcare marketing the and Benefits and are expected

Combined, basis of first costs to and expense approximately of for outlined normalize plan quarter XX% Many XX levels. a were at are held in of with the to business, we points with will $XXX I these end, XXX represent lower year accounting factors higher in entertainment-related or anomalies this than deferred our call At first year this and assets with gains assets quarter the million. losses on ago. plan. quarter you on in associated this approximately compensation travel in compared continue basis familiar expect virtual a XX% held likely costs levels pre-pandemic we pre-pandemic headwind margin of As utilize tools points our

reported increase revenue, reminder, XX.X% the As a basis, year margin $X.XX pronounced of the to increase adjusted there $XX.X reported operating XX.X% pre-tax for earnings ago, a reported normalize there XX.X% a compared per there is to the year so was find a ago. share income pre-tax we reported related in and this over a XX.X% earnings eliminate that million over per on or a prior non-recurring earnings $XX.X no for ago. of Adjusting income, On year GAAP And income G&A in first quarter this can on impact costs a details or or Paneth, to over share because was of $X.XX Marks year. the release but a of with a million, increase factor. $X.XX, year reported impact was table million, Reported the with a you of $XX.X is expense. you an impact you a loss XXXX gain can

Turning to items. flow cash

we the including for years. completed strategic in spent first acquisitions During payments quarter, $XX purposes, acquisition million on prior earnout

balance payments and $XX.X XXXX, of $XX.X And approximately XXXX, payments, of approximately In approximately million. million. estimate $XX.X ahead estimating future $XX.X Looking the in million. In million. for we we estimate earnout approximately XXXX, XXXX,

and program additional million. total shares XX, Since we $X date approximately million, shares a we repurchased a XXX,XXX XXX,XXX have through repurchase During XXX,XXX March continued repurchased the utilized to for and approximately have quarter, under $X.X to shares, shares yesterday. utilizing repurchased of an XXb first

and the due for quarter for compared high the end was Beyond in in the non-operating was was year-end, that first cash increase. $XXX,XXX. to plant of acquisitions receivables approximately repurchased, first uses $X.X at XX in expense capacity. unsecured Days Depreciation XX quarter with associated typically the seasonal of for outstanding $XXX acquisition of strategic a shares expense the year at days end, with outstanding the of and level seasonally CBIZ first our use of results amortization spending leaving is on $XX.X This ago. the credit $XXX of receivables unused and that compared ago. balance approximately At with million million work first was an million quarter million activity. line cash $XXX.X a Capital compared sales days quarter year increase amortization reflects million with associated in $X.X on the quarter the million a

depreciation with a XX% increase was million XXXX. first million compared approximately with we rate Adjusted year $XX.X of $XX $XX quarter an and quarter in over the ago. was amortization first tax quarter full The approximately at million For million, the year, approximately in year compared year XX.X% XX.X% effective ago. the year in first this project EBITDA full a for generated the $XX.X expense

than tax approximately this to causing the at the results. first $XXX.X of be flow business lower we in projected. either X.Xx million this end year EBITDA effective are to The or With higher effective by the rate rate full be approximately factors attributes we the of could continue at quarter. strong a credit impacted of an number reflect our facility, to But leveraged project XX%. cash unpredictable on For continue of our our year, outstanding

XX, million pipeline our the to amend intend of $XXX repurchase credit years million. shares. availability on To and goal to to the total this, by remains Looking to we facility ahead, to our potential and extend April maturity robust, acquisitions $XXX support increase current to efforts X with launched we continue

an close we seeking. early that target can million from are in final commitments to well our excess share currently bank of documentation, and facility upsized group, to May, have credit I expect today, subject are the in We $XXX we that

enhanced ahead of XXXX, impact compared the Looking in to the in revenue XXXX, with all acquired quarter. greatly the impact of balance January mid-year by XXXX, Paneth of made year the consider plus was in XX.X% prior acquisitions contributing the in first that was increase of total Marks growth acquisitions for with that the revenue first quarter

the first with pleased quarter very are strong revenue We X.X% growth. same-unit

balance strong that can of yet is continued it growth seasonally early full expected is year same results, first that X.X% at the With this sustained not be rate reflect the stage, the clear but year. strong throughout to the at quarter

$X.XX at we share And is share fully adjusted or weighted to performance full adjusted per XX XXXX strong of will count over higher We effective with earnings with I growth in the XXXX. to I comments, expectations share are the at year number Compared adjusted up turn and grow down Marks a $X.XX earnings year in this higher can expected So revenue share be of with expecting within XXXX. the expenses year of in these transaction integration factors XX% as the XXXX. growth a XXXX XX%, back in XX%, shares. expect XX% in grow be by eliminate end share full for to per our to range year, first will to Again, revenue rate The year $X.XX within of per approximately per compared mind, factors. with earnings for expected to And per XX%. the I in we Jerry. XX% conclude, a a to average can start at reported reiterate or GAAP by of the range diluted at $X,XXX.X those projected $X.XX, over Adjusted reported follows: of for to earnings it The total XXXX to -- approximately at share again, and we of full impacted reported billion these with unpredictable $X.XX in $X.XX, range full million with is tax XXXX ranges. Paneth, reported XX% expect year to end the to total revenue expect non-recurring

Jerome Grisko

Ware. you, Thank

labor respond to to the Before we also update to our a want doing rest year. our I a Like market wage want to of industry, brief and increasing the at move impact with pressure. to business. the dealing market provide Q&A, on latest we it's and having we're we competitive were what I beginning professional on competitive the the completed progress our the labor of on with which acquisition, services touch

onset early a or our competitors to to replenish of our laid than furloughed workers commitment. had made employees. we we headcount proactive started early a their relative to better the to the off of who to took team pandemic, actions at the and in minimize the of onset workforce. impact protect this the XXXX During on scramble place our pandemic commitment kept of then and many And because direct actions, We our

to on our attract top our in ability that ongoing success. focused competitive expand and need can comprehensive market, to and a retain ensure to strategy and critical we recruitment talent retention workforce. we recognize both to be Our is this We that maintain

activate to experienced connection We've translate expanded reach that their positions like to to school programs in career after for We've through enable outreach to new using members, who talent internship early recruiting tires. We source full-time level way than are CBIZ, create experienced ever national now securing to our the career LinkedIn digital assist and move. have a identifying and will team We've students all still determine invested integrated specific personnel, the national tools next proactive our own our and from and team best heavily also platforms more candidates in digital more programs in hires. to continued interns in advocates to graduation. to talent like place

goals we our our of overall to completed and to transactions presence to recent acquisition, growth key we continues service a markets, strategy. strengthening around be as Now strategic Marks our offerings most our expanding I'd Paneth. like and it M&A January, In component in announced a aligns turn priority talent. XXXX, Paneth in the with adding valuable attractive Marks our Similar to top

timing the Marks after within at By onset acquisition any completion we business, that the busy much bringing Services begin year, not on Paneth of of activity with of beginning until As integration would our understood season. from matters. Financial the the the

we've are additional support While bring our systems standard on Paneth business. the and to efforts team grow we made date, Marks and and to as provide to great our resources now accelerating platforms integration progress

able as that with pleased way This Marks are and year group look collective the was our of integrate to we fully more the team We our value clients our to Paneth be this into great and and the date deliver performance the to will to future. we forward a for prospects acquisition to speaks to operations. start

financial M&A the remain remains pursuing pipeline very strong, we we in aggressive to With move that, have Q&A. capacity Our and to will acquisitions.

Operator

Instructions]. [Operator

Chris CJS Moore, question First comes Securities.

Christopher Moore

So, same-store strong, X.X%. very growth is

it would which Ware challenging sense to relative of look be that. X.X%, just When little at Services, be a said, perhaps to Financial a those As you one could maintain. little the kind breakdown, between would of bit relative rates to a growth get trying those which sustain of -- harder XX.X% you the X,

Jerome Grisko

Chris, it's Jerry.

we've So what in are look, of confident extraordinary we're first with right rest year. seeing Those of with rates just and quarter, block. seen for really the the the growth pleased we're out the we're what

little one bit They're over wouldn't the I So a say different. other.

within rest a the that of predicting the there's came Within continued we're of won't received quarter season. of some Within group of course, for year. our first the growth and in but Financial busy rate we that strong revenue the just Services, rest the the Benefits continue we out year, through traditional that, of portion that the was contingent X.X%, that Insurance, within

out services embedded quarter. typically strong really advisory first the our Our received very, that's we as well which also offices we our as and as what very includes And consulting than in work came more growth. in equity call experienced growth strong; were private advisory traditional within in more practices, well. full we that strong compliance-oriented traditionally see But stronger

seen ability answer very year discretionary the rest the predict would your rest of with optimistic more is, on clients, we've to question I a pleased Now our for challenging. see that But our through what and we little of specifically, more into today, and that future. is really to what course, the say, of the

Christopher Moore

the Very in kind remind it. kind about of throughout you Got the helpful. early year, me, one Can traction your just pricing. In of talked in time done typically, that's the or that you prepared is comments, year?

Jerome Grisko

at the services. sending the compliance-oriented oftentimes know, of year, you we the be out stages, as in that's end early more a into new the head we year is, It to the going as Both. work pricing will for happen

So end at yes, weighted year. the heavily it's of very really the

then the yet of that will the into models year, a season. pricing continue the those to of our well. through as pricing to revenue rest our of place built going into amount And We busy in There's we'll generated we price still But be that's throughout through have the significant course. year have disciplines year.

Christopher Moore

any interest rise. it. potential a for one or areas? a to have Got Last Clearly, Fed's your Does base of The rates just really rates are much business of going impact me. meaningful on to client of in your increase any continue getting going.

Jerome Grisko

-- Yes, I'll our of as relates that's pressure we've it this one. been of we that But really adjust come well financing of the may concern there. able Ware more as impact to that cost and CBIZ, about pricing we one survey as maybe But the any clients, the interest issues it inflationary to on is up certainly rates, our inflation come. on for to turn

rest Ware? think it their impact of jury's still the on year levels. that, the relates the yet it may We've outlook seen that as one. So their to for confidence our not I clients, overall really out and but

Ware Grove

yet rates interest know rising term signs of activity synthetic respect our We locked bit. short down balance observation slowness slow to any X/X hedges. and sheet in the the yet, balance hiring balancing the a not With may cash our But on exposure And economic and X/X intermediate is moderate treasuries through rising but don't own to got and right balance, in a in still of inflation rates, we portfolio through we're so we seeing now term, activity economic is balance client act attempt pretty like. of sheet rates just an we're this My have robust. where fixed investment kind own we've the interest at where an little invest of then to or our in stage.

that the also the on interest side, offset reflect those extent rising on the income rates to So they anything side. expense

Christopher Moore

Got there. leave Very it. helpful. I'll it

Operator

Instructions]. [Operator

comes question of Blair. Andrew Next from Nicholas William

Andrew Nicholas

First I made, qualitatively one, how following being internal to you're to there a broader understand of up a your more incentives quantitatively, but that opportunistic on front give price strong the maybe to and on wanted seeing the realization or is but efforts price. question shot market? -- there. you tied the based want on be there's in Is bit to prior of the in Jerry, some ask the way qualitatively near-term that about of to comments -- quarter and it much versus if what kind wage you've any of Obviously, pressures, some help with aggressive kind us inflation

Jerome Grisko

together, think I work they Andrew.

our So think all increases clients we're of or all way. I obviously, it's approaching same receptive price this environment, in whether it kind the CBIZ to are because competitors, more

the it I a that about of and office. of allow be over to we're that, top them certainly We our more we're many better X somewhat I making the that in in service, we're expecting building to think So practice we're giving the is result that past management and able with timely capitalize pricing tools, training engagement. call profitability our investments we've to X investments the by our couldn't and giving it the client, in as past. on them pricing But been market think talked environment. offices team this in it. those On now we've years we've tune or them see And the by client giving made somewhat client I think and by optimize calls reporting,

Andrew Nicholas

quantify way from type in even a growth? kind for benefit there quarter of on price in a the to of the figure ballpark Is

Jerome Grisko

talked Ware and call, we're I X/X, again, pricing, the before talking accounting, I'd X/X, about say, X/X right? core volume. probably X/X this

Andrew Nicholas

could And Great. if I follow-up. Great. then a ask

the the about quarter. on advisory M&A-related services. you're talked what in Curious second services to You strength and thus front as far seeing private in equity that

I for slowdown? And within services? think you kind continuation potentially then said year-to-date trends? upside be those from what a you those guidance, types continued How could of of much you assuming are of Are expecting also your momentum. there a

Jerome Grisko

overall Yes. it We the give We don't on total guidance business. down. break

as I latter the will very on would year. say And within that guidance predicting of So what we're had year, a in extraordinary question, growth last guidance cautionary in So there's we right? top of note that, and to for our we have business is we have, that market an the our year set remain always we portion that the strong, the that we, around.

less it didn't forward, come there, within group. But if as look We chance in guidance. will our we, come visibility. of we find that performance strong would We're that that But the it certainly growth we somewhere. We're predicting that somewhere factors confident by one will our continue have else. have to is advisory we

strong work continued best in how about of first of performance. question, XX-day quarter, get As to the did strong a at really that look much which We first for about the is the what may part to we XX-, quarter the or for the as demand But is look very what of the outlook of services. have to we at those pipeline and end today, the like. continue this as --

Andrew Nicholas

squeeze If I in. more one could Great.

of bringing attrition? excited capabilities. strongly or about a of the on of particularly of and know you felt with season. was in know I of are one takeaways. spoke point Just own terms up early this busy know talent Marks really you I I lot for attrition some the you transaction, professionals expected of their professionals have in But at you a terms new were do tied the that it's to things Paneth sense about on lot any

if professionals or retention signs for are those your Just for retention wondering early positive?

Jerome Grisko

the Yes. busy or see tell, CBIZ, and out don't don't season. industry to typically busy Too came we early just the season. Andrew. turnover during much we anywhere, I really of turnover We mean

I So really because of with just But With I early. leaving not our acquisitions say part they too lot general is experience -- will it is experience became it that because to that would in we of CBIZ. turnover chance. we say do not said, are is historically what a that

like we Paneth, how And be, of we an talking place plan same actions thing -- the benefit great in to stronger much organization of them we believe people. with our stronger even talk Marks the and for We Marks But workforce an we'll outstanding of specific onboarding CBIZ. get part can call about in we believe develop be and stronger as it about plan advantage CBIZ. organization their great together. are Paneth in integration the being really -- front together, and We the have and is to I a but actually, culture

the that's get really get team as that So will have really face-to-face theme and with our into members new we offices there. we out the

Operator

to concludes the This Please call back I'd question-and-answer like ahead. Mr. the turn to go Grisko session. closing over for remarks. Jerry

Jerome Grisko

you. Yes. Thank

we team. want want analysts continued support. shareholders our this And take to our opportunity also recognize thank to and today, As your I wrap incredible for up I to

grateful approach dedication time Busy first a their brand. the their work is of other. reflect our how core year. Services, grueling to for each they how performance always it's for Our members support to and and and values team quarter are through team remain clients, and our to last who not our is the I start been team's our our the busy our over result for direct our year a within you even season very industry, live the within Financial our for

and today, listening day. For all our of Thank our enjoy we'll your thank that, you, members call. I you. conclude With team

Operator

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

now may disconnect. You

CBIZ (CBZ) 30 Apr 222022 Q1 Earnings call transcript