CBZ - Earnings call transcript Q1 2024

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Operator

Good day, and welcome to the CBIZ First Quarter 2021 Results Conference Call. [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

Good morning, everyone, and thank you for joining us for the CBIZ First Quarter 2024 Results Conference Call. call, to release of the cbiz.com. this have investor our with posted been Investor connection today's and press presentation website, In Relations page

a also our Investor and website. An being live As and can available Relations call transcript after replay to call. will webcast on link made the webcast found be archive this reminder, be a is the

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

Today's cash call include flows, regarding statements operations, prospects. financial and our business, may also strategies of condition, results forward-looking

give relate the statements Because estimates represent Forward-looking and any of to statements of to on date forward-looking subject have inherently future uncertainties. these matters results. occurred, call not yet and that statements this risks only to assurance are are intended not

cause no the factors and found future Exchange of materially such our results can differ update Many Commission. more and description A with filings to factors statements. in obligation could detailed to assumes Securities be this see these

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

Jerry Grisko

Thank you, Lori, and good morning, everyone.

to to We a strong report off pleased that we're year. are start to the

business with from every coming divisions. up major growth first across the X.X%, For line our total revenue X was quarter, service

came in we of services that quarter expected. the the our resilience and strong for performance and for serve. reflects optimism Our as And continued the demand clients

major X divisions. of turning Now performance to the our

accounting government care of Our across consulting. its Financial attacks, Services service each growth groups, health demonstrated X and advisory division major

increased essential services to Accounting that to clients. our demand pricing we services for high, and capturing provide reflect continued our our Tax and business, success value the the client in For of recurring & results include our remains these

closely for demand seeing are strong are those the Likewise, with improved strong to we activity. of After Services. for the including start impact year, QX in Advisory of a the more private flow services equity-related our already tied our Advisory the to Services that year start optimism, deal especially with also M&A cautious enjoyed

Encouragingly, for prefer IPO projects accounting, line. our within increased technical demand new we're see to also service beginning

business Government on to Health second Our projects. Care was the in as able securing made of in launching new this and build Consulting XXXX, business was successful progress half group new

strong During the quarter, to continued growth increased of work first the the volume year. the start of translated at

our achieving lines. Benefits Insurance where each across our of major to growth record turning and X division, service of Now maintained we our

growth compared rates. For Benefits strong the our the pool Employee business, client retention to came is producer our last year. often market period primarily same from Also, and

service business, For increased and strong market our Property revenue and continued results. to contributed rates Casualty

of in business. slight producers. remains of Services Growth planned to new pipeline special Investment This and by a business in projects was trends as number continues add largely P&C producers of healthy decline retirements. opportunities, business also in driven Retirement market by a our despite encouraged the Our business group a actuarial result our

sophisticated which our and demand our the in we of to HR, payroll quarter our centrally the services. in larger is business platform in first interest strong our business, Payroll consistent line was that revenue health and experienced and businesses rot. our strong serves more in growth For with for overall affirms upmarket The fuel continue expectations the

to guidance to Financial of remind call the are the the details way issued will background, on previously by Grove, our first for on guidance our provide over those performance year. we Ware? quarter. Chief turn our Officer, it of affirming our financial today specific more to Ware I for With now that XXXX. for And

Ware H. Grove

good you, and Jerry, morning, thank everyone. Well,

this released highlights take of to numbers, minutes morning. Let few key about talk first a me we the quarter

by last revenue quarter year. increased year with $XX.X acquisitions X.X% to growth Same or the first was or Total over compared up $XX.X X.X% or by up with first unit million up revenue a $XX.X ago. X.X%, million quarter contributing in million

Services, quarter, the X.X%, same-unit and Financial grew spread for total revenue our quarter was Advisory core by revenue total the Benefits for first strong and quarter, revenue X.X% and Within with the Consulting X.X%. Care Within Accounting, among Insurance first up Health Government grew growth Services revenue for Services. first

group traction in X.X%. The hire new to revenue and we growth. Every have producers service investments growth was enhance potentials investments made producers Benefits to our major continuing are Insurance up this business additional we in years line group. hiring make has unit Same of order gained further reported within and to revenue within recent in

included nonoperating first costs several and recorded pretax impacted in the that items administrative general within quarter Costs margin.

commented and year. have previously costs are that the somewhat be can We throughout legal episodic unpredictable

this settlements small margin is associated In impacting of is issue higher expense, cost no to the points. we first is with quarter, approximately costs and related higher a by variety one significant legal recorded issues. XX this, There driving legal basis

wanted So I to this you. for highlight

plan the item costs. health Another self-funded is care

previously results. the nonoperating this quarter year first and costs volatility potentially impacted margin Higher commented items points. short-term that XX in We have also by cause this in basis reported

price is price closing from the is With this course, XX And months. are $XX.XX news. aware lastly, ago increase of a up up $XX.XX XXXX. and March likely good share year past in of the a you of This, at year-end at is this from over $XX.XX year, CBIZ XX

employee X more phantom causes in an an increase closely with that The share approach of this accounting, $X.XX adjusted element impacted in quarter first in GAAP XX our reported plan align designed our compensation as place by higher reporting the These margin value with interest costs, however, items is a compensation-related to by earnings points. basis impacted shareholders approximately share fair per at share. a obligation

nonoperating these nature items are The somewhat unpredictable. of

year our for the it how But not the full outlook first balance unfold does So these will positive items. higher incurring year of costs for is unclear XXXX. these quarter change

the business is results, as the is look first very So that of is the Performance strong. expectations. our quarter line at with you takeaway in health I think

share with year we quarter adjusted strong very An a first comparing results earnings a this incurring XX% are consideration against year, that first to additional year first year per up this in a quarter year near ago, quarter ago. is last

we X During this quarter and acquisitions, EBK first of completed year, CompuData. the

are in extremely pleased good, to expectations. teams We are Initial have these with board this both year. performing of our they results are on and line

information, share earnings year other last per the compared X.X% the was a presenting adjusted related first an and of view onetime $X.XX, expenses quarter Earnings towards $X.XX. up acquisition-related comparable share With basis eliminating year and of nonoperating gains losses. on this meaningful impact per with adjusted for

and EBITDA the million this the numbers GAAP $XXX.X numbers included considering was in adjusted adjustments release issued per X adjusted reported table EBITDA, earnings Adjusted reconciling same earnings these months for year. share the is this A morning. to

with For the expense rise headwind approximately this a share the of quarter, expense share. impact the half borrowing earnings first in steady a we $X.XX reported $XXX,XXX of expected with in rates an interest we an per XXXX, in slight increase year. interest Considering throughout

As release. always, outlined and details in gains deferred of plan the nonqualified GAAP accounting the compensation our losses for are in

income a accounting. not income gains gross meaningful and As at the pretax is this comparisons, and for should impacted a of impact reminder, operating excluded be comparison. losses margin by you And as both the look

seasonal on Now XX March first facility balance outstanding quarter. cash million turning and normal this flow $XXX to On the use unsecured experienced of was the sheet balance the and ratio in cash with year, provides with capacity $XXX repurchases. the million continue items. We $XXX X.XXx leverage financing This to unused provides also of With of capacity. acquisitions adjusted strategic approximately million a to of EBITDA. share flexibility address approximately plenty our

the of In this year, earnout closed first including approximately We acquisitions, for we completed used million X these previously transactions. $XX on payments quarter acquisitions.

acquisitions earn-out For previously for closed. payments

earn-out million million Approximately use payments. $XX.X to $XX.X of in over expect approximately million remainder $XX.X XXXX, year. and million approximately in $X.X in the We XXXX, XXXX this pre-estimated

be Deploying of Since the strategic highest priority. continues for we have purposes, and capital that acquisition capital time. over transactions, acquisition for $XXX we to approximately deployed of XXXX, million earn-out purposes closed end have XX including the payments our

flexibility XX% capital shares Beyond share since use end to have shares were the acquisitions, repurchases, of since that for with time. using for repurchased of XXXX X.X approximately about capital the million outstanding we

approximately towards used capital million have of that We time. since share repurchases $XXX

and on last work into year deadline The the later 'XX recorded compared with in the year XX this the ago. driven March tax The quarter of XX consulting core tax days, business. first California days at increase a DSOs accounting outstanding our and year in filing first was the this end tax extended seasonal nature plus year. sales XXX part Days quarter by reflect the of

compared million, and the revenue, amortization debt points for compared was ago. first X months Bad the with ago. year a to $X.X basis year XX for expense Depreciation was of quarter million a XX $X.X basis points expense

year. approximately depreciation year, the $XX.X compared approximately million this million at full expect year For last with we amortization and $XX

by primarily the Amortization and driven expense acquisition assets. intangible is amortization activity of

For those was this, approximately be you the million amortization for year. adjustments million, like of make expense for amortization who $X.X may to full months, X $XX the year, for and this

last $X.X quarter in move fourth spending with that our year. headquarter of Capital $X.X was million, occurred new and quarter for first included million capital the the associated this items

a slightly of XX.X% X which For was the tax within full year million. months capital year, $XX year The expect to this million is a range the rate we spending ago. than for $XX effective from XX.X%, lower

for this a the within are in reasons, recurring steady many and effective XXXX clients. signs number approximately economic Benefits point, quarterly metrics our expect rate to provide at of of our The employment year XX%. we business, The essential volatile At services through our our look cycles. and at of tax full can be continue effective nature rate of seeing for tax employment-driven continued Payroll we stability as within and we

If growth, the can structure, mitigate variable to there a our of we number within revenue take are experience on and cost items impact. measures pressure we

for and business with first quarter very the this outlook the we a to pleased are continue We have of year positive performance year, in XXXX. of full the

the our So year guidance, reaffirm will we to say full following.

is X% the to within of XX% in per a XX%, revenue expect the X% XXXX. range We GAAP range a to to over $X.XX increase increase within year. total to earnings reported reported for of share expected

in rate either shares down lastly, factors. average within weighted million XXXX. a for 'XX of expect an share adjusted XX%. basis, we earnings adjusted the share rate XXXX for $X.XX, full reported XX the The to XX%, by could a of impacted expected to is count And was at diluted be that effective On share year XX% the tax over fully million up a or of is range earnings per increase of unpredictable of to XX.X number year full expected This to adjusted of XXXX. a approximately per within range

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

Jerry Grisko

you, Thank Ware.

update the brief an our part and our a of Before like on our M&A to year. a we we on be Q&A, on we've continues strategy, move provide volume completed as acquirer the growth choice, as years. our given reputation to I'd quality to M&A transactions and of that recent results for activity build key in of

have a and We acquisitions. healthy began of already this pipeline opportunities completed X M&A year with

As of accounting our impact Closter I Ericsson last earnings Colorado state. broader February, acquired the services us provides located firm EVK, EBK's financial across CPA in we services outlined or representation complements in Denver-based in range Springs, call, Colorado. growing a practice Brown and with our wide

middle-market These software, to high accounting in welcome specializes to CompuData. and our solutions our and on we services. essential solution rely technology that Headquartered ERP services CompuData and A provider their businesses. clients Last in pleased grow managed security computing, demand Philadelphia, operate targeting IT also cloud month, are premier in were organizations.

within our CompuData to another brings deep strengthen is M&A CompuData in of serve. knowledge technical build high that service industries by welcome EVK key example expertise our CBIZ. and teams how to offerings We clients. and both are that we're CompuData and using we demand

on move With we'll that said, to Q&A.

Operator

question Our with from Securities. CJS comes Moore [Operator Chris first Instructions]

Christopher Moore

another Maybe, M&A looks maybe just conversation. strong little CompuData of on normal on Congrats focus. continue very kind bit quarter. It the Jerry, interesting, the a outside definitely

to Just others? certain subset one better. of customers is Just just to a particularly a trying this trying relevant bit little understand segment is more understand, that maybe there than CBIZ to

Jerry Grisko

rationale reporting this But from systems, fact, is, the try assess we're press this just with more area them their equity strategic There to we we as in of receiving request clients number today, help this the each help our our their within go us was clients in that within a go we the it that and for put in and business. and try CompuData, little and put bit often Chris. the and But in in we and broadens we we -- our in service the meet acquisition practice, building we make, release. Thanks, we Yes. to allows we asked areas. instance, to systems advisory even services a that in to different them advisory -- help before private of out practice, assessed in really specifically the offering that and go rationale, demand,

Christopher Moore

just ago, say benefits and Got little it. to pretty on is I'll Paneth for is realized? Or years still stay acquisition Very The fully helpful. second. there synergies still one Maybe a been X much that cross-selling more than fair Marks from it ongoing there? M&A from that

Jerry Grisko

say would Chris. Yes. ongoing, I

as to migrate a on systems et of because or of the understand this we a cetera. get a amount we kind our operating lot their comes don't change first cross-serving there's there's year just good and change processes of lot and way systems that So from in to considerable is that is of synergies a systems,

first very of So little that. year, so --

We of fully they're, operating their should systems. to them, Their starting they're pricing I all now improve our margin onto are that now see initiatives. leaning our into think,

cross-serving would to continue We even of have accelerate coming although that I seen point would this that, organization, forward. expect some that from out

the expansion. beyond I the and where the of of see year margin really organizations in we to X out these start is X think that So and combination comes growth the revenue

Christopher Moore

I a it. do Fed impact XX uncertainty or Almost much terms Got at in, decrease increase is going basis you the that. a decrease there, small time where this in to from still viewing increase an the of have would QX, year? 'XX, points point in a from that say, the anywhere small of what early today, way would appreciate on sit you're much to in

Jerry Grisko

we're think when really is our And think is you they're about don't I this what client the clients our that that I stable seeing we're what hearing right? No, And looking sentiment, question, year. from actually were asking And thinking a was more -- that so. environment. for I

I started see think and now. last at we're that to year, it we end the seeing of

point, is think they and basis their they level as understand clients XX field that gives or confidence we'll And -- change continue to a and our don't really long a way to swing I the So the fairly businesses. as think one playing another. that I invest sentiment. there grow climate,

Christopher Moore

it. Got

And expense fiscal on versus better one one roughly for bit maybe understand think, in viewing negative just a had, $X.XX to trying last Interest how you're little And I 'XX? Sorry. it impact Ware. 'XX year-over-year. 'XX

Ware H. Grove

We have Yes. Thanks, Chris. just half felt Yes, year, last was the like 'XX rise spike vast majority of not this the increase you small year-over-year we the versus year, but in rates year. 'XX. when been just to saw last there because in last residual a compare would a year, general half first see still impact a of first

expectations, baked So in QX, and small when half into also I $X.XX first commented it's really our a in comparison, impact about that's be course. of a impact QX, a there may but

Operator

Andrew Our Blair. William next with question Nicholas comes from

Andrew Nicholas

deal at multiples? to color a way little spoke within the larger. the also talk on that's is versus Maybe And are then tuck-ins pipeline to that to your deals there but do how end Jerry, that with M&A on capacity interest little bit maybe prepared of any or that, some to even the up? just even a or more bit start on remarks, your your about Wanted commentary you pipeline. shaping

Jerry Grisko

of number transactions I with pipeline. it's the our is that that of pipeline the pipeline that both the size of changed we at and were of here's year Well, were what we about the pleased in Andrew. said the that Thanks, the and beginning the transactions what year Yes. not would from really is, say beginning

deals go come transactions this and we've evidenced pleased X are some some we've and that smaller, are fact always, the but pretty larger and As so as year. by closed far already

we really As with platform large said multiples below of to we've consistent which moving XX seen much. again, the what past multiples, is transactions, months, answer the kind over haven't

activity firms. private There accounting of the is considerable space with in amount equity a

exception over large in shifts that the transactions. accepting investment the X announcement time seen with first material was but in private from equity. of the the was There an February, to think platform we will Baker date there multiples, I that quarter, impact Tilly haven't were

went we've trade then multiples direction. Thornton same in that significantly Grant typical -- in. that than March, Those the would higher And transaction engage normally add the we

So that's what's happening on side. the multiple

as significant talent that our time already we're in you'll see far from us the market means to a have in service kind to those might acquisition platform And demand. interested that things expand allows high As line and tuck-ins more for we of us versus pool in of both. the a look, presence Tuck-ins or transactions, that be expand time. tuck-in always

transaction in not where But to a have we time, quality would scale. market stand-alone in market. the have opportunity an we a do We to as time new transaction add from a small members existing team

mean line transactions concerned, by the $XX team I the demand say -- those it, client, PE based As far great team, in high would Philadedelphia I as well, worked was had service was CompuDate, with though past. and even $XX they team million, call call million, larger don't that a in I in revenue, our categories. was it our would fit are -- our

cultural alignment there. good So

types our right really boxes. continue of those we always continue said, would integrate we've if acquisitions. those strategic as based and onboard fit checked to be ability in And We fit, transaction, and kind all of will cultural then the on sizable evaluate when those So certainly and to to transactions. interested the

all to would I say. So the guess, yes of I above,

Andrew Nicholas

is than from runway before for M&A private kind on helpful. a or envision practices that's you ecosystem. the I on Do you with response. ask the more appreciate multiples encroaching certain accounting really now deals thorough moving areas the I services just the in about equity kind of more, one think within sub the others? when follow-up No, of Maybe market

way over in And and priorities to accounting opting any those your private that or is, some equity-backed it uniform ask on players for your really or have tax do similar question that Or own you competitors maybe to pretty order? cyber another front? strategic over any of advisory of and other indication is

Jerry Grisko

accounting where speculating they guessing that active in time over response where But been tax right? space. be the bit certainly, activity activity suspect I'm practices. has I'm today the traditional That's we will bit. little also there, is my a the Yes. little core advisory in a I see most in of very more

some are There private in they're date, to the firms core accounting. are that equity space, but in that active interested same not firms

so the So full just of same not PE spaces, the we we do have but have -- in they're disclosure, both do competition those firms.

firms -- platform also of in and I it seen today. haven't establish time, once accounting more in they more really advisory we although suspect think space, see will scale over the we a a of core those some that I

Andrew Nicholas

perfect more your ramped pretty business, you talk that the or the sense. more how then in And course a optimistic Services like me of Makes Can is least optimistic activity maybe at clients particular. about M&A-related you're maybe it Advisory quarter? the on for one are just sounds and little bit over

the me better rest relatedly, And those to last of that, Because does margin if of segment. that's is profile like types Financial we businesses recap of feel Services could relative the kind what than time of spoke. the the then just it you to incrementally

Jerry Grisko

Yes.

as as advisory would type client practices are the space. say far be of I So to demand advisory tends that that Andrew, the within what

year, practice cyber advisory that X well, mentioned give demand and within on Point. a announced within risk I That -- our Last is That's as you So practice. practice. we examples. Pivot I'll is

demand our there. We had high hearing were We from capacity clients. some some

to candidly, what be organization. it's all But us, within So that broad-based I another really we'll think meet a about the be higher the there to season We're able Pivot of opposed should advisory there. Point with as joined clients, enthusiastic to although do great demands. demand more client, kind

well. And that as so we're pursuing

we're that within CompuData. to those specific seeing are demand shift the really But services I'll for advisory clients.

hearing to question, a response As is Chris' in I really within practice. that our that equity we're my private mentioned demand

there, a and obviously, their there. alignment systems in them of helping we're needs, financial and So with there's lot there correlation

was and really lost, CompuData. with oftentimes we asked helping the another don't them that get was I about the systems, strategic I there -- their that fit question margin. of So there

Ware H. Grove

are Yes, accounting. generally core higher, the margins speaking, in than tax and the the advisory business

and mid the an tax in on core upper the side. XXX if is to annual on might expect So basis teens XXX basis, or higher accounting we points advisory

Operator

Riddick Citi. comes Our question next from with Marc

Marc Riddick

So or about particular provided. some to verticals, you've thanks detail I of side? what if either can sort you're of maybe things [ of call ] seeing sort negative are there with maybe share already maybe the on you or was the been for any And areas all of curious that out one that any the your client industry have interest, positive buses

a perspective, maybe then or whether footprint stronger any And of thoughts geographic little share sort regions could than from others? you if similarly a performed we're seeing not

Jerry Grisko

it's Marc, Jerry. Yes.

not again, business not said, concentrated characteristics of that we've obviously is one concentrated overly of the favorable As geography. any in single we're overly We're kind of industry. very one in our

when we it So oftentimes, concentrations. health be have care the you sector, when tech energy or sector, sector high in don't impact those might another, those you center or one way the see -- see the

rest client So the generally industry we're environment we among I that reasonable the think, level of broad-based the in sentiment and for of over the prospects different other. year, in a as would to we're across clients, really where industries seeing optimism, the not in a they're one would market our say middle hearing, see as I today

today and more out, out with little at point. one be of a if maybe guess factors, we'd one where the construction a I they and of this call one to I cost materials industry Construction other think interest rising tepid call with that's had I number bit think rates the are -- might I

would see be industry. clients that that, But -- short unfavorable hearing our wouldn't the or I that we're would of not in from favorable anything

would and say the nice same there, across geographies. geography, seeing I and strength generally all second nice is growth The thing the thing

Marc Riddick

time And end at as opportunities? now anything to just between maybe spend future little of you or you reinvest looking growth in investments at? be as you a sort Or maybe highlight year that you'd maybe then might internally to sort what the might that Excellent. like looking near-term far of least could us generally at of and be the

Jerry Grisko

Yes.

anything I ordinary. more solutions that think to the to So of don't make business investments long growth. products continue to outside considering differentiated have we mean, I a to and and always accelerate to efficient to bring continue we're list the the client and

the So for in about on growth acceleration, we've years investments producers. our talked obviously,

continue We investments. to those make

to make on We embedded focused in generally investments more that tools understanding what how those but have of and and AI efficient, will including that continue the products, products tools and innovation they are in significant types an business. that's may those impact the make we us group are blockchain third-party generative

So there is a list of investments.

make to continue those. We

We have made those.

-- We our what within the our within continue anything beyond think those performance. to year. what accustomed we've But you're to throughout models don't I financial make

Ware H. Grove

Ware. is Yes, this Mark,

standpoint, from Just producers just the months. XX to these for of operating increase considered talk about an just investment the new time, in hiring to we'll investment what the ramp-up because time, first we an in XX call it's from time

time to or And margins on has from choppy benefits of a less as our hired kind that we've more and so time. had impact insurance

with impact group of the quarter were done you're right And our 'XX. that wraparound and kind quarter now Insurance 'XX hires first in of with impact the that now on seeing first Benefits margins in

national in increasing tax are that's office, also our generating and a resources We resource. revenue

a be might timing difference and there revenue. the investment the the again, between hiring So versus

that offshoring So capacity. as we And kind view an thirdly, capabilities we're and investment. up then our of beefing

They're upwards from terms also and XX use throughout committed kind but as of gone and for us them year and we some XX tax seasonal, for consulting in to offshore year beyond resources to resources. the we've the So well. the services they're on XX of accounting, throughout of highly

of we're X we're with X are So timing are what examples. where, investments areas any the as against doing of management those that the are examples payback. And those those weighing team, tangible

Operator

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

Jerry Grisko

you, Thank everybody.

opportunity and also do, to the we to thank and company. shareholders take our I analysts our opportunity we want your team. up Before want wrap as for our thank of team take always this today, continued of our I support an to and recognize to

outlined wrapping within the team. I want we just beyond our across the very go we As up started had company for year. today's busy above great to that our to another season we're clients working hours many our group and very the attacks and that we've accounting team start recognize tax call, members long to with

our team And to within by their is Our our growth our and to team's makes to possible. supporting obviously other clients, the what results company. continue inspired I be driving and to dedication impressed commitment each

So want for our team, you I to say thank for your support.

one your we CBIZ. Your exceptional can harnessing enjoy and day. Thank by power of on you, efforts together the what your focus and achieve

Operator

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

now may disconnect. You

CBIZ (CBZ) 25 Apr 242024 Q1 Earnings call transcript