cbz-20230427
false000094414800009441482023-04-272023-04-27
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
April 27, 2023
Date of Report (Date of earliest event reported)
CBIZ, Inc.
(Exact name of registrant as specified in its charter)
Delaware1-3296122-2769024
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
6801 Brecksville Rd., Door N
Independence, Ohio 44131
(Address of principal executive offices, including zip code)
216-447-9000
(Registrant's telephone number, including area code)
Note Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading
Symbol(s)
Name of each exchange
On which registered
Common Stock per value $0.01 per shareCBZNew York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
    Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.


Item 2.02    Results of Operations and Financial Condition
On April 27, 2023, CBIZ, Inc. (the "Company") issued a press release announcing its financial results for the three months ended March 31, 2023. A copy of the press release is furnished herewith as Exhibit 99.1. The exhibit contains, and may implicate, forward-looking statements regarding the Company and include cautionary statements identified important factors that could cause actual results to differ materially from those anticipated.

Item 9.01    Financial Statements and Exhibits
(d)    Exhibits
99.1    Press Release of CBIZ, Inc. dated April 27, 2023, announcing its financial results for the three months ended March 31, 2023.
104    Cover Page Interactive Data File (embedded within the Inline XBRL document)



SIGNATURES:
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: April 28, 2023

CBIZ, Inc.

By:/s/ Ware H. Grove
Name:Ware H. Grove
Title:Chief Financial Officer


Document



Exhibit 99.1

https://cdn.kscope.io/4901274ce1d72d093a785a4a3dea1d37-cbiznewlogoa.jpg
    
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FOR IMMEDIATE RELEASECONTACT:  Ware Grove
    Chief Financial Officer
    -or-
    Lori Novickis
    Director, Corporate Relations
    CBIZ, Inc.
    Cleveland, Ohio
    (216) 447-9000
CBIZ REPORTS FIRST-QUARTER 2023 RESULTS
FIRST-QUARTER HIGHLIGHTS:
TOTAL REVENUE UP 16.1%; SAME-UNIT REVENUE UP 10.0%
GAAP EPS UP 30.9%; ADJUSTED EPS UP 23.7%
NET INCOME UP 25.9%; ADJUSTED EBITDA UP 22.0%

CLEVELAND (April 27, 2023) – CBIZ, Inc., (NYSE: CBZ) (“CBIZ” or the “Company”), a leading provider of financial, insurance and advisory services, today announced results for the first quarter ended March 31, 2023.
For the 2023 first quarter, CBIZ recorded revenue of $454.6 million, an increase of $62.9 million, or 16.1%, compared with $391.7 million reported for the same period in 2022. Acquired operations, net of divestitures, contributed $23.6 million, or 6.1%, to revenue growth. Same-unit revenue increased by $39.3 million, or 10.0%, for the quarter, compared with the same period a year ago. Net income was $73.2 million, or $1.44 per diluted share, compared with $58.1 million, or $1.10 per diluted share, for the same period a year ago.
Excluding non-recurring transaction and first-year integration expenses related to the acquisition of Marks Paneth in January 2022, and expenses related to the acquisition of Somerset in February 2023, Adjusted net income was $74.3 million in the first quarter of 2023 compared with Adjusted net income of $62.6 million for the same period a year ago. Adjusted earnings per share was $1.46, an increase of 23.7% compared with Adjusted earnings per share of $1.18 for the same period a year ago. Adjusted EBITDA for the first quarter was $113.3 million, up 22.0% compared with $92.9 million for the same period in 2022.
Schedules reconciling Adjusted net income, Adjusted earnings per share and Adjusted EBITDA to the most directly comparable GAAP measures can be found in the tables included in this release.
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During the three months ended March 31, 2023, the Company repurchased approximately 0.4 million shares of its common stock on the open market. Between April 1, 2023 and April 26, 2023, the Company repurchased an additional 0.2 million shares. The balance outstanding on the Company’s unsecured credit facility on March 31, 2023, was $403.7 million with $190.0 million of unused borrowing capacity.

Jerry Grisko, CBIZ President and Chief Executive Officer, said, “With same unit revenue up 10.0% and total revenue up 16.1%, we are pleased that our strong performance in 2022 has continued into the first quarter of 2023. With this encouraging start to our year, we would expect our full-year results to come in at the high-end of the guidance that we provided in February of this year.”

“We are also pleased to bring another outstanding accounting firm to our CBIZ team with the acquisition of the non-attest assets of Somerset CPAs and Advisors which closed effective February 1 of this year. Although they have only been with us for a short time, Somerset is performing in line with expectations and was a meaningful contributor to strong first quarter results. We continue to have a healthy pipeline of acquisition candidates and access to sufficient funds to pursue those opportunities.” Grisko concluded.
2023 Outlook
The Company expects revenue to grow within a range of 8% to 10% over the prior year.
The Company expects an effective tax rate of approximately 28%. The increased rate, up from 25.5% in 2022, will impact diluted earnings per share by approximately $0.08.
The Company expects a weighted average fully diluted share count of approximately 50.5 to 51.0 million shares.
The Company expects GAAP fully diluted earnings per share to grow within a range of 15% to 17%, to $2.31 to $2.36 per share over the $2.01 per share reported for 2022.
The Company expects Adjusted fully diluted earnings per share to grow within a range of 11% to 13%, to $2.36 to $2.41 per share over the Adjusted earnings per share of $2.13 per share reported for 2022.
Conference Call
CBIZ will host a conference call at 11:00 a.m. (ET) today to discuss its results. The call will be webcast and an archived replay will be available at https://cbiz.gcs-web.com/investor-overview. Participants may register at https://dpregister.com/sreg/10177806/f911fa5dfc.
About CBIZ
CBIZ is a leading provider of financial, insurance and advisory services to businesses throughout the United States. Financial services include accounting, tax, government health care consulting, transaction advisory, risk advisory, and valuation services. Insurance services include employee benefits consulting, retirement plan consulting, property and casualty insurance, payroll, and human capital consulting. With more than 120 offices in 33 states, CBIZ is one of the largest accounting and insurance brokerage providers in the U.S. For more information, visit www.cbiz.com.
Forward-Looking Statements
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
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uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include, but are not limited to, the risk that the anticipated benefits and perceived advantages of an acquisition may not be achieved; the impact of COVID-19 or governmental rules related to public health issues on the Company’s business, operations and clients; the Company’s ability to adequately manage and sustain its growth; the Company’s dependence on the trend of outsourcing business services; the Company’s dependence on the services of its CEO, other key employees, producers and service personnel; the effects of any potential cyber-attacks; competitive pricing pressures; general business and economic conditions; and changes in governmental laws or regulation affecting the Company’s clients, business, business services operations, or business models. A more detailed description of such risks and uncertainties may be found in the Company’s filings with the Securities and Exchange Commission at www.sec.gov.
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CBIZ, INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(In thousands, except percentages and per share data)

  
Three Months Ended March 31,
2023%2022%
Revenue$454,606 100.0 %$391,722 100.0 %
Operating expenses (1)
341,011 75.0 290,299 74.1 
Gross margin113,595 25.0 101,423 25.9 
Corporate general and administrative expenses (1)
15,598 3.4 16,309 4.2 
Operating income97,997 21.6 85,114 21.7 
Other income (expense):
Interest expense(3,641)(0.8)(1,259)(0.3)
Gain on sale of operations, net99 — — — 
Other income (expense), net (1) (2)
5,112 1.1 (6,407)(1.6)
Total other income (expense), net1,570 0.3 (7,666)(1.9)
Income before income tax expense99,567 21.9 77,448 19.8 
Income tax expense26,407 19,321 
Net income$73,160 16.1 %$58,127 14.8 %
Diluted earnings per share$1.44 $1.10 
Diluted weighted average common shares outstanding50,762 52,955 
Other data:
Adjusted EBITDA (3)
$113,348 $92,892 
Adjusted EPS (3)
$1.46 $1.18 

(1)CBIZ sponsors a deferred compensation plan, under which a CBIZ employee's compensation deferral is held in a rabbi trust and invested accordingly as directed by the employee. Income and expenses related to the deferred compensation plan are included in "Operating expenses" and "Corporate general and administrative expenses," and are directly offset by deferred compensation gains or losses in "Other income (expense), net." The deferred compensation plan has no impact on "Income before income tax expense."
Income and expenses related to the deferred compensation plan for the three months ended March 31, 2023, and 2022 are as follows (in thousands):
  
Three Months Ended March 31,
2023% of Revenue2022% of Revenue
Operating expenses (income)$4,760 1.0 %$(5,667)(1.4)%
Corporate general and administrative expense (income)642 0.1 %(811)(0.2)%
Other income (expense), net5,402 1.2 %(6,478)(1.7)%

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Excluding the impact of the above-mentioned income and expenses related to the deferred compensation plan, the operating results for the three months ended March 31, 2023, and 2022 are as follows (in thousands):

  
Three Months Ended March 31,
20232022
As ReportedDeferred Compensation PlanAdjusted% of RevenueAs ReportedDeferred Compensation PlanAdjusted% of Revenue
Gross margin$113,595 $4,760 $118,355 26.0 %$101,423 $(5,667)$95,756 24.4 %
Operating income 97,997 5,402 103,399 22.7 %85,114 (6,478)78,636 20.1 %
Other income (expense), net5,112 (5,402)(290)(0.1)%(6,407)6,478 71 — %
Income before income tax expense99,567 — 99,567 21.9 %77,448 — 77,448 19.8 %

(2)Included in "Other income (expense), net" for the three months ended March 31, 2023 and 2022, is expense of $0.6 million and $0.6 million, respectively, related to net changes in the fair value of contingent consideration related to CBIZ's prior acquisitions.

(3)Refer to the financial highlights tables for a reconciliation of Non-GAAP financial measures to the most directly comparable GAAP financial measure, and for additional information as to the usefulness of the Non-GAAP financial measures to shareholders and investors.













































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CBIZ, INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
(In thousands)
SELECT SEGMENT DATA

Three Months Ended March 31,
20232022
Revenue
Financial Services$343,086 $288,746 
Benefits and Insurance Services100,054 92,486 
National Practices11,466 10,490 
Total$454,606 $391,722 
Gross Margin
Financial Services$98,643 $78,946 
Benefits and Insurance Services23,131 19,829 
National Practices883 914 
Operating expenses - unallocated (1):
Other expense(4,302)(3,933)
Deferred compensation(4,760)5,667 
Total$113,595 $101,423 

(1)Represents operating expenses not directly allocated to individual businesses, including stock-based compensation, consolidation and integration charges, and certain advertising expenses. "Operating expenses - unallocated" also includes gains or losses attributable to the assets held in a rabbi trust associated with the Company's deferred compensation plan. These gains or losses do not impact "Income before income tax expense" as they are directly offset by the same adjustment to "Other income (expense), net" in the Consolidated Statements of Comprehensive Income. Net gains/losses recognized from adjustments to the fair value of the assets held in the rabbi trust are recorded as compensation expense (income) in "Operating expenses" and “Corporate, general and administrative expenses,” and offset in "Other income (expense), net."

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CBIZ, INC.
SELECT CASH FLOW DATA (UNAUDITED)
(In thousands)

Three Months Ended March 31,
20232022
Net income$73,160 $58,127 
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization expense8,625 8,173 
Gain on sale of operations, net(99)— 
Bad debt expense, net of recoveries461 549 
Adjustments to contingent earnout liability, net630 642 
Stock-based compensation expense3,831 3,689 
Other noncash adjustments2,749 2,992 
Net income, after adjustments to reconcile net income to net cash provided by operating activities89,357 74,172 
Changes in assets and liabilities, net of acquisitions and divestitures(133,868)(125,062)
Net cash used in operating activities(44,511)(50,890)
Net cash used in investing activities(45,896)(81,531)
Net cash provided by financing activities61,778 170,446 
Net (decrease) increase in cash, cash equivalents and restricted cash(28,629)38,025 
Cash, cash equivalents and restricted cash at beginning of year$160,145 $150,474 
Cash, cash equivalents and restricted cash at end of period$131,516 $188,499 
Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheet:
Cash and cash equivalents$2,265 $558 
Restricted cash25,109 33,394 
Cash equivalents included in funds held for clients104,142 154,547 
Total cash, cash equivalents and restricted cash$131,516 $188,499 


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CBIZ, INC.
SELECT FINANCIAL DATA AND RATIOS (UNAUDITED)
(In thousands)

March 31, 2023December 31, 2022
Cash and cash equivalents2,265 4,697 
Restricted cash25,109 28,487 
Accounts receivable, net442,781 334,498 
Current assets before funds held for clients501,617 397,113 
Funds held for clients148,240 171,313 
Goodwill and other intangible assets, net1,005,873 951,702 
Total assets2,038,196 1,879,124 
Current liabilities before client fund obligations310,942 338,940 
Client fund obligations150,216 173,467 
Total long-term debt, net401,772 263,654 
Total liabilities1,266,266 1,165,672 
Treasury stock(853,793)(824,778)
Total stockholders' equity771,930 713,452 
Debt to equity52.0 %37.0 %
Days sales outstanding (DSO) (1)
94 74 
Shares outstanding50,312 50,180 
Basic weighted average common shares outstanding50,367 51,502 
Diluted weighted average common shares outstanding50,762 52,388 

(1)DSO is provided for continuing operations and represents accounts receivable, net, at the end of the period, divided by trailing twelve month daily revenue. 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 GAAP. DSO on March 31, 2022 was 94.


















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CBIZ, INC.
GAAP RECONCILIATION
Net Income and Diluted Earnings Per Share (“EPS”) to Adjusted Net Income, EPS and EBITDA(1)
(In thousands, except per share data)

Three Months Ended March 31, 2023Three Months Ended March 31, 2022
AmountsEPSAmountsEPS
Net income $73,160 $1.44 $58,127 $1.10 
Adjustments:
Transaction costs related to acquisitions (2)
611 0.01 1,329 0.03 
Integration & retention costs related to acquisitions (2)
1,003 0.02 4,684 0.09 
Income tax effect related to adjustments(428)(0.01)(1,500)(0.04)
Adjusted net income$74,346 $1.46 $62,640 $1.18 
Interest expense$3,641 $1,259 
Income tax expense26,407 19,321 
Gain on sale of operations, net(99)— 
Tax effect related to the adjustments above428 1,500 
Depreciation2,975 2,779 
Amortization5,650 5,394 
Adjusted EBITDA$113,348 $92,893 


(1)CBIZ reports its financial results in accordance with GAAP. This table reconciles Adjusted net income, Adjusted EPS and Adjusted EBITDA to the most directly comparable GAAP financial measures, “Net income” and "Diluted earnings per share." Adjusted net income, Adjusted EPS and Adjusted EBITDA are not defined by GAAP and should not be regarded as an alternative or replacement to any measurement of performance under GAAP. Adjusted net income, Adjusted EPS and Adjusted EBITDA, which excludes significant non-operating related gains and losses, are used by the Company for its shareholders and debt holders as a performance measure to evaluate, assess and benchmark the Company's operational results.
(2)These costs include, but are not limited to, certain consulting, technology, personnel, as well as other first year operating and general administrative costs that are non-recurring in nature. Amounts reported in 2023 related to the costs incurred related to the Somerset acquisition and those reported in 2022 related to the Marks Paneth acquisition.




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CBIZ, INC.
GAAP RECONCILIATION
Full Year 2023 Net Income and Diluted Earnings Per Share (“EPS”) to
Adjusted Net Income, EPS and EBITDA Guidance
(Amount in millions, except per share data)
Full Year 2023 Guidance
LowHigh
AmountPer Share AmountPer Share
Net income$121.1 $2.31 $123.2 $2.36 
Transaction and integration costs related to Somerset (1)
3.6 0.07 3.6 0.07 
Income tax effect related to adjustments(1.0)$(0.02)(1.0)$(0.02)
Adjusted net income$123.7 $2.36 $125.8 $2.41 
Interest expense$20.8 $20.8 
Income tax expense 47.2 47.2 
Tax effect related to the adjustments above1.0 1.0 
Depreciation and amortization35.9 35.9 
Adjusted EBITDA$228.6 $230.7 
GAAP diluted EPS for 2022$2.01 $2.01 
Adjusted diluted EPS for 2022 (2)
$2.13 $2.13 
GAAP diluted EPS range 15 %17 %
 Adjusted diluted EPS range11 %13 %
GAAP Net income for 2022$105.4 $105.4 
GAAP Net income range15 %17 %

(1)Includes estimated integration costs related to the Somerset acquisition. Such costs include, but are not limited to, certain consulting, technology, personnel, as well as other first year operating and general administrative costs that are non-recurring in nature.
(2)A reconciliation between net income and adjusted net income and a reconciliation between GAAP diluted EPS and Adjusted diluted EPS for fiscal year ended December 31, 2022 are presented as follows:
  
Year Ended December 31, 2022
In millionsEPS
Net income$105.4 $2.01 
Adjustments:
Gain on sale of assets, net(2.4)(0.05)
Transaction costs related to Marks Paneth1.3 0.03 
Integration and retention costs related to Marks Paneth9.2 0.18 
Income tax effect related to adjustments(2.1)(0.04)
Adjusted net income$111.4 $2.13 
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