CBZ - Earnings call transcript Q3 2024

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Operator

Good morning, everyone, and welcome to the CBIZ Third Quarter and 9 Months 2024 Results Conference Call. [Operator Instructions] Please also note, today's event is being recorded. At this time, I'd like to turn the floor over to Lori Novickis, Director of Corporate Relations. Ma'am, please go ahead.

Lori Novickis

Good morning, everyone, and thank you for joining us on today's conference call to discuss CBIZ's third quarter and 9 months 2024 results.

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

presentation release posted website. to also press Relations Today's have of Investor page been investor and our the

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

this of subject call any and not are to represent give results. that to statements intended future are and statements inherently to expectations, projections our as of Forward-looking not assurance forward-looking and occurred, these have matters risks estimates statements Because yet related of date uncertainties. this

future materially of release such as our be Many A the in description required detailed results except Exchange with factors in and today's more Commission. found to Securities by statements, filings assumes could and no factors to these differ and cause law. update obligation press CBIZ can

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

Jerry Grisko

on acquisition thank will joining our remainder we're in third for time little This final us for the of and the for provide our of year. closing bit today's a pleased you outlook morning, and and exciting performance call. quarter company our later Marcum as is Good to to the I today's progress We're in Lori. share you, discuss Thank an our an update of for stages call. our

for highlight the our quarter the our demonstrated was by to business, strong First, year-to-date. of health which both overall results third want I and

total with has our X expected performed of generally this as revenue first quarters up year, the business X.X%. For

third the was revenue quarter, X.X%. up total For

in our quarter, While impacted we results expected, headwinds our the second are some unique period. results X-month which that first as did face for

on commented for our we stronger, this in expected. call, planned out As we and second they quarter as results our came being quarter

do year. only quarter-to-quarter, why but not guide the full we for reason Another

turning of divisions, division. was business driven Financial experienced The our Now pricing. performance tax the with and in by to our primary organic core starting two solid accounting Services our growth primarily

solid Our which advisory to anticipated. third with services, discretionary, be stronger rates project-based even a also more tend and growth than had quarter

health consulting worth existing be for It's now also government care performance the expansion to a strong business projects. very very contracts our strong continues and from highlighting work of had of coming that the new and year

major our all Insurance also division, we Within and service experienced Benefits in lines. growth

end hear clients opportunities and the As I've mentioned calls, on of survey of their we a cross-section the informally concerns. on plans each economy, at quarter sentiment to our past to invest,

has sentiment to of last client the waned of cautious somewhat remainder express same While optimism the this compared clients continue year, period year. through our many to

longer-term and pending volatility around potential and changes. concerns regulatory national election, both on for the short-term, anticipated, focus As legislative market

economy the are this Clients also Access months. months has the how talent wait reasons concerns at compared the before but concerns cited period unfold to businesses, see when outlook to to and to of general in coming of incremental continuing for improved as around the and geopolitical beginning same investments of material year. the committing inflation mind these next top the

strong, prospects business remainder for this as about year. any they we're to serve in our the the health business navigate our and of for change, depth and see optimistic expertise. clients remains of time we The services the unmatched our given of environment, breadth opportunities of very As the of

for outlined am I date, guidance previously XXXX. full the Given our to performance strong to year pleased our reaffirm

will provide quarter and and Ware discuss now by guidance, third it XXXX year-to-date. year I Ware? including more performance will to for we over QX We turn impacted Marcum when on full XXXX results. to of announced that the details our the

Ware H. Grove

morning, the I Jerry, you, we minutes few released good take want the to results and of quarter run to highlights this year-to-date a everyone. Thank and morning. third through

commented, for Jerry As major have closing the transaction Marcum satisfied. conditions been

coming We close this in may expect transaction days.

expenses that in nonrecurring onetime transaction, been the in share. both You third significant per year-to-date. should from note quarter results incurred adjusted then earnings when GAAP expenses we connection These have this are merger-related eliminated and report with

items results You pacing as Many of a items this release. quarter that expected. will have find reconciliation of second year resolved outlined earlier in the the impacted quarterly these been

quarter XXXX quarter adjusted a year was third year quarter the we a was this this XX% within first a share over per earnings increase share is expected reported the XX% XX% ago. third X.X% full expect share year X to in at per range reported per ago. compared momentum established up earnings months over over through $X.XX year balance a the adjusted positive Third and year ago. of earnings up for with year to the The Adjusted to $X.XX, continue of

up in expectation, Marcum any expected. Total revenue third X.X%. full the the CBIZ quarter X.X% fourth with year course, combined of potential by excludes impact revenue and operating unit results This the by acquisition in quarter same should the from increased close as

months, X.X% For third up revenue X.X%. the up revenue unit was same the X.X% by by group same revenue up Total with X.X%. unit revenue up Financial with quarter our in was total Services X within by

X.X%. revenue For the revenue Services by with Financial months, was unit X total within up X.X% same up

of service As the increase Jerry pricing of lines in much drive are in revenue. continue with increases to commented, growth experiencing organic all

quarter, in revenue with group, up X.X% Total Within this being third all and the the for was Benefits Insurance organic of growth nature.

up within months, months. unit For X.X% total and was up with the the X for X.X% same revenue Insurance revenue by Benefits X

the is this lines of Services, to services contributing with case As Financial major all are growth.

acquisitions acquisitions, transactions, X we made we prior used and in these for years. million on X made earn-out first During payments $XX.X months, the plus

payments we For this of year, of payments balance approximately for million. earn-out $X.X estimate additional the

year approximately XXXX, was we points is $X.X year for approximately for and points $X.X was compared For million. approximately of for revenue this basis ago. Bad year XX this compared sales in a for XX X days million, approximately revenue with X Capital and months debt a $X.X it XXXX, third months, XX Days million; million. million; X outstanding was basis spending estimate with ago. expense totaled year $XX.X XXXX, approximately of the the days quarter the $XX.X

office full for was the million. The focused connection months is $XX.X and was $X.X capital the for and third expect year. year We the to of spending on facilities. Depreciation this million, amortization approximately quarter majority spending improvements million in with this for $XX be X tenant

$XX approximately For the expect full depreciation and amortization to year, we be million.

share who credit debt through and time, a strong. cash by The XX higher our we want outstanding the million the balance million, $XX leverage have flow facility significant adjustment, at you spending capital with September $XXX the of approximately those with intangible was to a year acquisitions. an EBITDA longer continues primarily $XX in of was September at approximately nonoperating and associated Over on period repurchases. driven million million amortization XX million approximately of investment of make on of than was $XX acquisitions For allocated The to combination of beginning amount assets. be against acquisition-related $XXX.X X.Xx. Operating at calculated

will that bank closing oversubscribed to we a toward XX fourth to A announced $X.X is credit This to quarter facility is nearly we ahead in million merger our we flow look by commitment we facility attributes. The XX%, which facility standing committed billion revolver The close concurrent the X-year commitment is the of close which newly banks, believe upcoming the credit new the a an group market The billion round a testament plus financing transaction. existing have was successfully and a of banks syndicated with component. loan our transaction, the X stability has comprised of upsized total been $X.X out commitment. ready. facility represent the $XXX within XX% July of ready of As expected new cash term additional

Xx upon CBIZ to may within X.Xx strategic for EBITDA to the acquisitions growth capital arise. levels rapid closing provide through deleveraging plus X.XXx range of continue leverage as This approximately will initial be allocate opportunities planned within months. flexibility July, with in to future EBITDA a enable outlined of address repurchases deleveraging to rapid As to XX share

July, XX described to in an within to As expect basis points. to XX we achieve improvement we margin range of continue annual

revenue manner, to strive with growth in over As CBIZ. growth we similar our track we consistent achieve leverage to expect record greater greater a we scale, and opportunity leverage time with will

possible acquisition for year As CBIZ quarter we expectations enter the the reiterating of Marcum combined is has not it to results we expectation yet revenue incorporate yet XXXX, for are growth. closed, comfortable of full adjusted a forecasted not earnings and fourth XXXX. The

quarter comparable to transaction expected, close efforts has results turn fourth planning to to expect what XXXX. seen over planning. have it reasonable closed, with CBIZ Once integrated integration of gone you a the the effort the seasonal years. Considerable into is merger we is can pattern With similar for

we year-end that greater results, the a detail in 'XX XXXX be As is at expectations announced our normal practice, will in time. position when share we to

to to expected weighted year per over reported the basis, of within increase the a a reported of full count, to million earnings XXXX. excluding expectations effective the expect recap, count expenses This The for Marcum for expected due earnings range for CBIZ range We within of per a could and remain for revenue by the share adjusted be either as we approximately be revenue or range shares. than share 'XX acquisition for rate Marcum-related X% adjusted of million XX.X share XX%. a year. today. On impact X% to impacted And within XX% lower down a total growth follows: number range or earnings diluted to $X.XX is of to from reported fully XX% tax X% transaction 'XX XXXX an adjusted to the any at So XX for share the within is to higher unpredictable expected share per average the for XXXX lastly, up or rate the for factors. expect $X.XX increase GAAP recorded is

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

Jerry Grisko

become more the to this for XXXX on play CBIZ of the fourth months alongside in tools remaining do I team by members time meaningful said, transaction revenues the that today our development coming here update we the forward billion, major market resources Thanks, the $X.X use strong. provide industry people all the Marcum even a brightest when work pending our history. win very clients combined days focus latest to including stage. With even that behind position on We of of Hart-Scott-Rodino results XXXX We advice industry expertise, will unmatched array the industries talented while business will our broad provider us acquisition, Group. With footprint, guidance Marcum and the work depth the over war and investment for team to the a been shareholder members will expertise will also our want national XX,XXX offices of clearance, experience rationale services, markets closing in size, and upon greater providing we're including the the access interesting quarter the best-in-class on innovative solutions. scale, approval coast, our professional and and the excited largest at offering technologies, and and met, close opportunities learning combination an to and even in Marcum in new have has coast look include of and closing, breadth conditions the CBIZ also and of essential kind year deeper our of to matter over bigger new capabilities, in to lines, products CBIZ many and the strategic ever-present of expertise insights, largest X the anticipate talent. With past been The industries, provide XX acquisition, CBIZ the the service full actionable our most as announce and Ware. already of impact in to services services our Partner about subject finishing will approximately approval better and very breadth February. national and

let's Q&A. Now move to

Operator

[Operator Andrew Our from William question today Blair. from Instructions] comes Nicholas first

Andrew Nicholas

me, a high-level maybe now been internal employee it's to deal, potentially to a wanted one excuse your base partners know I the and Marcum understand get start. since and client months Marcum Obviously, have the both employees comfortable it. and deal on to more -- gotten couple with of base ask

has internally? feedback the Just what curious been

to speaking I have quite a imagine bit traveling teams. various been you

a Just might role people maybe what like? on Or any firm? Marcum to play wondering in kind what the you feedback look is? structure expect of combined from that post-integration any And color leadership the the big

Jerry Grisko

couldn't with own Yes, here here well internal Andrew, as the I you. we've Jerry. Marcum our as thank from that pleased more This both be team is the -- had, at team reception our team. CBIZ

As Spurio, working a array XX of offices you the Chris we others lot these suggested together will been Ware, opportunities that over even in organizations time Marcum broader and together. when have past envision teams an our have both myself, bring spent the days the X terrific come to of

I feel walked when the excitement after And very Manhattan, going I come office, to as a together. just had chat, in office, organizations. the a walked the Marcum we're my first about office CEO day these that opportunities we the where shared downtown where anecdote X could myself an came Marcum through to the recently done visit of I you the fireside it and through combining in

expand XX, now Together, think we groups, industry have industry we'll I our groups.

they better We have services we've The to have Like time out industry and they -- out. advisory their that. sorry, said, be in worked They complementary advisory groups more strength those energy and the past couldn't teams the more that decade. hard almost I'm clients. over can to in services bring combination in feel now that building I build spend

tax, have the going And functional on? developed, core We have from we marketing, all comment, to XX streams been work accounting kind everything and finance IT. second that of areas, and probably working have what your been

refer X in how Marcum we the have but is representation CBIZ We from the and it, box team working basically to a by equal team side side.

about the ago work people a We brought a all had in we room. those month together. had meeting where We streams XX

how the working we've done encouraging many, it would way the that is together of us the a about for that and it we part and move many height. together an those this most meeting and no entire way need that will forward we to and was organization by go take way, even side have this done have And was teams forward there been that greater was build thought You X to you've and foundation side years. conversation virtually

around future. as leadership structure. come So both we the encouraging, close around and experienced haven't to your the last from leadership, announced what I've we in super days what excitement To seen -- formally to here. the hopefully we've and ahead next in the ahead question the get days That's few as we closing

my that we they team, their a But an this of extraordinarily direct if that of my combination share or historically a And positions positions. hire team our in team. reports, legacy representative some number members of you months. members then very sample direct remaining gone have I outside the my strong those look that here some what XX we'll team certainly, team remaining know And their months in out are see what coming a in will the in joining team a is we'll have have past of of in team. we've Obviously, and XX new team. team senior is the of strength I was reports, our ago, -- at strong

us X/X, going X/X, heights kind team X/X, forward. to that's So but positioned take to even greater of a

the super opportunities. about So excited

Andrew Nicholas

follow-up than highlighted something expectations advisory the size you your little Jerry, of you third you one on things you maybe seeing that last question, the M&A Where that of strength? is kind my mentioned transactions. for Great. was pockets Can a quarter of then of the a you I think unpack are quarter. bit being that stronger And I in bit? think expected underperformed

can insight that what the next there So other just year? provide early the pipeline any and quarter looks on like maybe and you for fourth

Jerry Grisko

Yes.

combination So advisory of the third strength really services in of really almost across the the strong the board, our quarter. all performed

amount episodic. to saw in with And know, project-based, were we less the activity be little PE We of tends pleased on came activity that pretty predictable, the more board. side, strong the advisory you As that's tends there. more to the be across it really a

not X but they flow, the X deal transactions strong or we year more So albeit transactions. ago, still not as say, were, were as had larger

pieces So performance but smaller that very more work, in group. strong

very So encouraging.

Operator

comes Chris question Securities. next CJS from Moore from Our

Christopher Moore

year. like a it to a terms to next mentioned pricing. year? organic you going mean, the about we're likely in little X% what's growth that a So normally back pricing couple lot of times is bit X% -- Maybe talk it the looks think was X% in X% from guess, on about I of there? And per of increase to just I

Ware H. Grove

Ware. Chris, is this Yes.

get pricing. got to revenue, to efficiencies question, line. To on realization also we've organic management, But with be it's continue to in on that was We've is good this pricing. relatively years, side, the when XX% good improved lower inflationary in reasonable know and Financial expect continue two. the efficiencies of drives there the more recent pricing and it increase engagement the the in at the reduction rate to by particularly other commensurate yield that of I engagements combination driven look We your it's top driven than the commented easier before measure and to Services by kind increases a you and XX% of

it or has than it's So been pricing years. but lower that, not X% is X%, in higher it's than recent

Christopher Moore

nicely it out sounds a it. from care that government Got surprise? see back. of you was there? kind It's like what's And Or growing happening health it's services, and could it

Ware H. Grove

referencing you're stumble -- a absolutely. midyear we question. We And can we've year had ago. Yes, Great seen the that. probably

last was good. half year Second

note the now higher cresting of a grows, of half to healthy. basis having terrific as on great single-digit at a percentage million that rates year-over-year. was is rate achieve, year. year That $XXX And harder very growth this continues it's to business year. but it's Cautionary again. this a They're kind that grow First and growth

Christopher Moore

leverage is Marcum. is X.Xx in smooth? of Got maybe -- most to more I happen a that just a X.Xx X.Xx reasonably half -- perspective, back X.Xx post terms close XX Or deleveraging months that going within that from then say, We're about loaded as of to somewhere is from it. XXXX mean, deleverage And to Just talking in, being one in and

Ware H. Grove

things, A the Chris. nature got of business. couple the of Yes. seasonal We've

cash. those years. and And basis. with on So in fourth typically seasonal be business up basis, a receivables. cash in net. you've very a we pretty first half, the We quarter, the seen on what annual build quarter that use the nature first an similar third then combined the and and liquidate that will sufficient over means cash as CBIZ to on receivables we a the flow It's generate positive And

bit as back we we 'XX. gate amounts, of initially liquidate a even end, maybe of the and little half that in course, second those see with to leverage I we've think you the about the tick to So through in of might then, leverage out higher And close half come July. steady talked 'XX, of first that higher and that

And 'XX. in then pattern a similar

should of it end down second around the by the be So leverage. year, a Xx

over should Of But the cash things and burdened steady similar a attributes flow course, seen and expenses to with the the nature business be like have of the very the years. that. of and some integration first transaction we you've CBIZ what also year, very in strong combined with costs

Operator

from Marc Riddick next Our comes Sidoti. question Instructions] from [Operator

Marc Riddick

of, revenue be should seeing mix that the about the ties if there's work a if thinking threat if how touch the I was sort efforts sort to that could. as moment, that common discretionary to you've strengthen on years it? a of little wondering wanted about thinking again, commentary had that component made pricing. gains maybe well dynamic, of there we whether part you're the the to in or be bit on was as was should thinking pricing you or I benefit that we project-based any pricing for I that And a over we of the

Ware H. Grove

Yes.

-- there's lot me Let unpack there. a to

X information, put us some look hopefully, a place give But let questions. bit, ago little profitability really clients actions. So granular specific get that that targeted in take And rewind specific action we some tape with a at and at years me our service and address specific and things ability tools to you helped engagement of pricing just look pricing, the I'll then and yield just or plans X books and like to to a that business okay? really enabled lines, your

XXX% you of Now time. pricing a don't the get

-- annual So revenue minimal there organic back growth. be the blow and is to continues Interestingly to over we've years to the again, yet, major a a really cycle be recent It or embedded a into but our now minimal, annual seen message you've engagement contributor and driver contributor we've major this little renewal a that year. I in approach the that be pricing experienced the so major and is years. And baked our expected. think it's planning,

it's X% always Now going not it X%, in was like to X%, be recent years.

So with half to maybe the this But approach. where very of we And a said similar they have is thing can then respect of say with rate. this we've inflation Marcum, kind underlying commensurate think the year, it's I other that.

that, So this is totally as we think combine together, we're operations. sync in I something

Marc Riddick

one we that of sort should as an before. be I Excellent. Is and sort about you're there of as -- Marcum? update what retention be -- then maybe And one client far retention seeing? And about you've your that haven't speak client trends you thinking of think comments historically early, thought similar and but how quick maybe you've think can seen? to about combined? that you Are that be it if might they you might with do And to if seen this,

Jerry Grisko

question, Thanks, answer To is are your Marc. encouraging. which ours, client to Marcum's very retention very Yes. rates similar

quartile, certainly -- the top information industry the they're decile our I based top all at and we're see, think we place. on of the at same

there. something forward. would like both that going They're organizations we there's continue already to So for fix best-in-class, expect not and to

Operator

Jerry like I'd And closing back Grisko question-and-answer ladies and gentlemen, for today's the remarks. that, with to floor session. to any turn over concluding we'll be

Jerry Grisko

as shareholders today's of our do, and also I extend the continued always gratitude to support. call Marcum. thanking our and thank you, team I want by end your analysts our new from for to CBIZ want our to our Thank team I Yes. members

As for our that continue our in people value serving rise the of commitment to creating to and other, shareholders for future. organizations, team and incredible the to ahead, vast the clients, we're we many supporting lie ways. prepare and our closing X these unlocking integration opportunities for so challenge opportunities our our each the Through

As I've proud dedication the I've said and speaking to Thank you times of our a at possible. our and for of more conclusion recognize Marcum moment a to year. the excited made number been of collective team, never new great day. that the and internally I'm have we forward our future, to this teams all, and Have look strength

Operator

and the today's thank has conference now you presentation. for Ladies We concluded. attending gentlemen, do

disconnect You may now lines. your

CBIZ (CBZ) 29 Oct 242024 Q3 Earnings call transcript