CBIZ Reports Third-Quarter 2004 Results
CLEVELAND, Oct 26, 2004 /PRNewswire-FirstCall via COMTEX/ -- CBIZ (Century Business Services, Inc.) (Nasdaq: CBIZ) today announced its financial results for the third quarter of 2004.
CBIZ reported revenue of $121.6 million for the quarter ended September 30, 2004, an increase of approximately $4.2 million over last year's third-quarter revenue of $117.4 million. Same-unit revenue for the third quarter increased by 2.3%, or by $2.7 million, compared with a year ago. Business units acquired since the third quarter a year ago added $2.3 million to revenue, while units divested resulted in a revenue decline of $860,000. Net income from continuing operations for the quarter was $490,000, or $0.01 per diluted share, compared with $324,000, or $0.00 per diluted share recorded for the third quarter of 2003.
As of September 30, 2004, bank debt stood at $52.5 million compared with $14.0 million at the beginning of 2004. In addition to the tender offer completed during the second quarter of 2004 which resulted in the repurchase of approximately 7.5 million shares, the Company has also completed open market purchases of approximately 1.8 million shares of its common stock for a total cost of $45.3 million during 2004.
For the nine-month period ended September 30, 2004, CBIZ reported revenue of $394.5 million compared with $383.9 million for the nine-month period a year ago, an increase of $10.6 million. Same-unit revenue increased by 3.4%, or by $12.9 million, for the first nine months. Acquisitions have contributed $7.5 million to revenue growth for the first nine months of 2004 and divested operations accounted for a decline in revenue of $9.7 million compared with the first nine months a year ago. Net income from continuing operations was $14.7 million in 2004, or $0.18 per diluted share, compared with $14.0 million for the first nine months of 2003, or $0.15 per diluted share.
Operating expenses for the three months and nine months ended September 30, 2004, include additional restructuring expenses primarily associated with real estate leasing costs in the Chicago market. For the third quarter, restructuring expenses increased by $380,000, and for the nine months, restructuring costs increased by $744,000, compared with the same periods a year earlier. In addition, corporate general and administrative expenses for the three and nine months ended September 30, 2004 include higher legal fees associated with several long standing litigation issues as well as higher expenses associated with the company's compliance efforts in connection with Section 404 of the Sarbanes Oxley Act. For the third quarter, these expenses increased by approximately $1.4 million, and for the nine months, these expenses increased by approximately $2.0 million compared with the same periods a year earlier.
"During the third quarter, we announced the signing of a new $100 million credit agreement for CBIZ which gives us added flexibility to fund our growth, make acquisitions and conduct share repurchases," stated Steven L. Gerard, Chairman and CEO. "We recently announced two acquisitions and for the year we have made four acquisitions that will strengthen our presence in the markets we serve. We continue to be encouraged by our same unit revenue growth, and our progress in developing cross-serving revenue is exceeding our expectations. However, we have continued to experience operating difficulties in one business unit due to its rapid growth over the past two years and that unit is performing well below our expectations. The pre-tax income contribution from that unit has declined by $4.0 million through the first nine months compared with a year ago, which is the equivalent of $0.03 per share," continued Gerard. "Combined with the additional legal and other expenses we have incurred through the first nine months, the full year impact of these items on earnings per share is estimated to be about $0.05 per share. Not withstanding this, our current outlook for the full year is that we expect earnings per share will increase by 20% to 25% above the $0.17 per share we reported for 2003," concluded Gerard.
CBIZ will host a conference call today at 11 a.m. (ET) to discuss these results. The call will be webcast in a listen-only mode over the Internet for the media and the public, and can be accessed at http://www.cbiz.com . Investors and analysts can participate in the conference call by dialing 1-888-862-6557 several minutes before 11:00 a.m. (ET). If you are dialing from outside the United States, dial 1-630-691-2748. A replay of the call will be available starting at 1:00 p.m. (ET) October 26, through midnight (ET), October 29, 2004. The dial-in number for the replay is 1-877-213-9653. If you are listening from outside the United States, dial 1-630-652-3041. The access code for the replay is 10012580. A replay of the webcast will also be available on the Company's web site at http://www.cbiz.com .
CBIZ is a provider of outsourced business services to small- and medium- sized companies throughout the United States. As the largest benefits specialist and one of the largest accounting, valuation and medical practice management companies in the United States, CBIZ provides integrated services in the following areas: accounting and tax; employee benefits; wealth management; property and casualty insurance; payroll; IS consulting; and HR consulting. CBIZ also provides valuation; litigation advisory; government relations; commercial real estate advisory; wholesale life and group insurance; healthcare consulting; medical practice management; property tax solutions; and capital advisory services. These services are provided throughout a network of more than 160 Company offices in 34 states and the District of Columbia.
Forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to certain risks and uncertaintigs that could cause actual results to differ materially from those projected. Such risks and uncertainties include, but are not limited to, the Company's ability to adequately manage its growth; the Company's dependence on the current trend of outsourcing business services; the Company's dependence on the services of its CEO and other key employees; competitive pricing pressures; general business and economic conditions; and changes in governmental regulation and tax laws affecting its insurance business or its business services operations. A more detailed description of such risks and uncertainties can be found in the Company's filings with the Securities and Exchange Commission.
For further information regarding CBIZ, call the Investor Relations Office at (216) 447-9000 or visit http://www.cbiz.com .
CENTURY BUSINESS SERVICES, INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
(In thousands, except percentages and per share data)
THREE MONTHS ENDED
SEPTEMBER 30,
2004 % 2003 (1) %
Revenue $121,550 100.0% $117,396 100.0%
Operating expenses 109,877 90.4% 107,394 91.5%
Gross margin 11,673 9.6% 10,002 8.5%
Corporate general and administrative
expense (2) 6,841 5.6% 4,940 4.2%
Depreciation and amortization expense 4,105 3.4% 4,095 3.5%
Operating income 727 0.6% 967 0.8%
Other income (expense):
Interest expense (369) -0.3% (234) -0.2%
Gain on sale of operations, net 78 0.1% 207 0.2%
Other income, net (2) 527 0.4% 452 0.4%
Total other income,
net 236 0.2% 425 0.4%
Income from continuing operations
before income tax expense 963 0.8% 1,392 1.2%
Income tax expense 473 1,068
Income from continuing operations 490 0.4% 324 0.3%
Loss from operations of discontinued
businesses, net of tax (372) (352)
Gain (loss) on disposal of
discontinued businesses, net of tax 238 (210)
Net income (loss) $356 0.3% $(238) -0.2%
Diluted earnings (loss) per share:
Continuing operations $0.01 $-
Discontinued operations - -
Net income $0.01 $-
Diluted shares outstanding 79,373 88,971
Other data from continuing operations:
EBIT (3) $1,254 $1,419
EBITDA (3) $5,359 $5,514
(1) Certain amounts in the 2003 financial statements have been reclassified to account for discontinued operations.
(2) Corporate general and administrative expense includes legal settlements, which were previously classified as other income (expense), net.
(3) EBIT represents income from continuing operations before income taxes, interest expense, gain on divested operations, and impairment charges for a note receivable related to the divestiture of an operation in 1997. There were no impairment charges related to this note for the three months ended September 30, 2004 and 2003. EBITDA represents EBIT as defined above before depreciation and amortization expense. The Company has included EBIT and EBITDA data because such data is commonly used as a performance measure by analysts and investors and as a measure of the Company's ability to service debt. EBIT and EBITDA should not be regarded as an alternative or replacement to any measurement of performance under generally accepted accounting principles (GAAP).
CENTURY BUSINESS SERVICES, INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
(In thousands, except percentages and per share data)
NINE MONTHS ENDED
SEPTEMBER 30,
2004 % 2003 (1) %
Revenue $394,515 100.0% $383,893 100.0%
Operating expenses 340,617 86.3% 332,034 86.5%
Gross margin 53,898 13.7% 51,859 13.5%
Corporate general and administrative
expense (2) 18,275 4.6% 14,633 3.8%
Depreciation and amortization expense 12,216 3.1% 12,653 3.3%
Operating income 23,407 6.0% 24,573 6.4%
Other income (expense):
Interest expense (1,038) -0.3% (854) -0.2%
Gain on sale of operations, net 996 0.3% 1,991 0.5%
Other income (expense), net (2) 1,358 0.3% (558) -0.1%
Total other income,
net 1,316 0.3% 579 0.2%
Income from continuing operations
before income tax expense 24,723 6.3% 25,152 6.6%
Income tax expense 10,053 11,155
Income from continuing operations 14,670 3.7% 13,997 3.6%
Loss from operations of discontinued
businesses, net of tax (589) (594)
Gain (loss) on disposal of
discontinued businesses, net of tax 238 (393)
Net income $14,319 3.6% $13,010 3.4%
Diluted earnings (loss) per share:
Continuing operations $0.18 $0.15
Discontinued operations (0.01) (0.01)
Net income $0.17 $0.14
Diluted shares outstanding 82,480 94,267
Other data from continuing operations:
EBIT (3) $24,765 $25,640
EBITDA (3) $36,981 $38,293
(1) Certain amounts in the 2003 financial statements have been reclassified to account for discontinued operations.
(2) Corporate general and administrative expense includes legal settlements, which were previously classified as other income (expense), net.
(3) EBIT represents income from continuing operations before income taxes, interest expense, gain on divested operations, and impairment charges for a note receivable related to the divestiture of an operation in 1997. Impairment charges for the nine months ended September 30, 2004 and 2003 were $0 and $1,625, respectively. EBITDA represents EBIT as defined above before depreciation and amortization expense. The Company has included EBIT and EBITDA data because such data is commonly used as a performance measure by analysts and investors and as a measure of the Company's ability to service debt. EBIT and EBITDA should not be regarded as an alternative or replacement to any measurement of performance under generally accepted accounting principles (GAAP).
CENTURY BUSINESS SERVICES, INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
(In thousands, except percentages and ratios)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2004 2003 (3) 2004 2003 (3)
Revenue
Accounting, Tax & Advisory
Services $45,144 $41,619 $163,760 $158,578
Benefits & Insurance
Services 36,449 37,364 113,382 115,734
National Practices - Other 17,695 18,910 53,051 53,817
Medical Practice
Management 22,262 19,503 64,322 55,764
Total $121,550 $117,396 $394,515 $383,893
Gross margin
Accounting, Tax & Advisory
Services $2,615 $(176) $27,563 $25,220
Benefits & Insurance
Services 5,306 6,517 18,072 22,083
National Practices - Other 1,563 1,071 5,417 154
Medical Practice
Management 4,333 4,141 11,181 10,005
Total (1) $11,673 $10,002 $53,898 $51,859
SELECT BALANCE SHEET DATA AND RATIOS
SEPTEMBER 30, DECEMBER 31,
2004 2003 (3)
Cash and cash equivalents $3,977 $3,791
Restricted cash $13,807 $10,880
Accounts receivable, net $112,116 $109,436
Total current assets before funds
held for clients $145,215 $140,050
Funds held for clients $48,027 $44,917
Goodwill and other intangible assets $170,924 $167,280
Total assets $420,639 $402,145
Current liabilities before client
fund obligations $64,762 $63,499
Client fund obligations $48,027 $44,917
Bank debt $52,500 $14,000
Total liabilities $171,567 $124,307
Treasury stock $(80,518) $(35,087)
Total stockholders' equity $249,072 $277,838
Bank debt to equity 21.1% 5.0%
Days sales outstanding (2) 78 81
Shares outstanding 76,621 85,371
Basic shares outstanding 80,200 90,400
Diluted shares outstanding 82,480 92,762
(1) Includes operating expenses recorded by corporate and not directly allocated to the business units of $2,144 and $1,551 for the three months ended, and $8,335 and $5,603 for the nine months ended September 30, 2004 and 2003, respectively.
(2) Days sales outstanding (DSO) represent accounts receivable at the end of the period (before the allowance for doubtful accounts) divided by daily revenue (year-to-date revenue divided by number of days in the period). The Company has included DSO data because such data is commonly used as a performance measure by analysts and investors and as a measure of the Company's ability to collect on receivables in a timely manner. DSO should not be regarded as an alternative or replacement to any measurement of performance under generally accepted accounting principles (GAAP).
(3) Certain amounts in the 2003 financial statements have been reclassified to account for discontinued operations.
SOURCE Century Business Services
Ware Grove, Chief Financial Officer, or Lori Novickis,Corporate Relations, of of Century Business Services, Inc., +1-216-447-9000
http://www.cbiz.com