CBIZ Reports First-Quarter 2018 Results
FIRST-QUARTER HIGHLIGHTS:
- REVENUE +10.2%
- SAME-UNIT REVENUE +5.8%
- EPS FROM CONTINUING OPERATIONS +42.2%
For the 2018 first quarter,
2018 Outlook
- The Company expects growth in total revenue within a range of 5% to 8%.
- The Company expects to report an effective tax rate of approximately 25% as a result of the Tax Reform Act, although a number of factors may impact the tax rate. The Company expects a weighted average fully diluted share count of approximately 56.0 million shares for full-year 2018.
- The Company expects to achieve growth in fully diluted earnings per share within a range of 13% to 17% over the
$0.92 reported for 2017. Adjusted for the one-time 2017 impact of the Tax Reform Act, the Company expects to achieve growth within a range of 20% to 24% over the adjusted$0.87 reported for 2017.
Conference Call
A replay of the webcast will be made available approximately two hours following the call on the Company's web site at www.cbiz.com. For those without internet access, a replay of the call will also be available starting at approximately
About
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 uncertainties 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 and sustain 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 the Company's insurance business or its business services operations. A more detailed description of such risks and uncertainties may be found in the Company's filings with the
|
||||||||||||||||
THREE MONTHS ENDED |
||||||||||||||||
MARCH 31, |
||||||||||||||||
2018 |
% |
2017 |
% |
|||||||||||||
Revenue |
$ |
266,090 |
100.0 |
% |
$ |
241,459 |
100.0 |
% |
||||||||
Operating expenses (1) |
204,750 |
76.9 |
% |
192,766 |
79.8 |
% |
||||||||||
Gross margin |
61,340 |
23.1 |
% |
48,693 |
20.2 |
% |
||||||||||
Corporate general and administrative expenses (1) |
10,028 |
3.8 |
% |
8,768 |
3.7 |
% |
||||||||||
Operating income |
51,312 |
19.3 |
% |
39,925 |
16.5 |
% |
||||||||||
Other (expense) income: |
||||||||||||||||
Interest expense |
(1,780) |
-0.7 |
% |
(1,517) |
-0.6 |
% |
||||||||||
Gain on sale of operations, net |
663 |
0.3 |
% |
22 |
0.0 |
% |
||||||||||
Other (expense) income, net (1) (2) |
(1,229) |
-0.5 |
% |
2,737 |
1.1 |
% |
||||||||||
Total other (expense) income, net |
(2,346) |
-0.9 |
% |
1,242 |
0.5 |
% |
||||||||||
Income from continuing operations before income tax expense |
48,966 |
18.4 |
% |
41,167 |
17.0 |
% |
||||||||||
Income tax expense |
13,156 |
16,141 |
||||||||||||||
Income from continuing operations |
35,810 |
13.5 |
% |
25,026 |
10.4 |
% |
||||||||||
Income (loss) from operations of discontinued businesses, net of tax |
41 |
(152) |
||||||||||||||
Net income |
$ |
35,851 |
13.5 |
% |
$ |
24,874 |
10.3 |
% |
||||||||
Diluted earnings per share: |
||||||||||||||||
Continuing operations |
$ |
0.64 |
$ |
0.45 |
||||||||||||
Discontinued operations |
- |
- |
||||||||||||||
Net income |
$ |
0.64 |
$ |
0.45 |
||||||||||||
Diluted weighted average common shares outstanding |
55,924 |
55,214 |
||||||||||||||
Other data from continuing operations: |
||||||||||||||||
Adjusted EBITDA (3) |
$ |
55,858 |
$ |
48,303 |
(1) |
|
(2) |
Included in "Other (expense) income, net" for the three months ended |
(3) |
Refer to the financial highlights tables for a reconciliation of Non-GAAP financial measures to the nearest generally accepted accounting principles ("GAAP") financial measure, and for additional information as to the usefulness of the Non-GAAP financial measures to shareholders and investors. |
|
||||||||
SELECT SEGMENT DATA |
||||||||
THREE MONTHS ENDED |
||||||||
MARCH 31, |
||||||||
2018 |
2017 |
|||||||
Revenue |
||||||||
Financial Services |
$ |
180,603 |
$ |
158,633 |
||||
Benefits and Insurance Services |
77,330 |
75,164 |
||||||
National Practices |
8,157 |
7,662 |
||||||
Total |
$ |
266,090 |
$ |
241,459 |
||||
Gross Margin |
||||||||
Financial Services |
$ |
47,570 |
$ |
39,244 |
||||
Benefits and Insurance Services |
16,197 |
15,022 |
||||||
National Practices |
882 |
655 |
||||||
Operating expenses - unallocated (1): |
||||||||
Other |
(3,423) |
(3,274) |
||||||
Deferred compensation |
114 |
(2,954) |
||||||
Total |
$ |
61,340 |
$ |
48,693 |
(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 include gains or losses attributable to the assets held in the Company's deferred compensation plan, which do not impact "Income from continuing operations before income tax expense" as they are directly offset by the same adjustment to "Other (expense) income, net" in the Consolidated Statements of Comprehensive Income. Net gains/losses recognized from adjustments to the fair value of the assets held in the deferred compensation plan are recorded as compensation income/expense in "Operating expenses" and as income/expense in "Other (expense) income, net". |
|
||||||||
THREE MONTHS ENDED |
||||||||
MARCH 31, |
||||||||
2018 |
2017 |
|||||||
Net income |
$ |
35,851 |
$ |
24,874 |
||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization expense |
5,775 |
5,641 |
||||||
Bad debt expense, net of recoveries |
1,766 |
734 |
||||||
Adjustments to contingent earnout liability |
1,609 |
616 |
||||||
Other |
(1,244) |
195 |
||||||
Net income, after adjustments to reconcile net income to net cash used in operating activities |
43,757 |
32,060 |
||||||
Changes in assets and liabilities, net of acquisitions and divestitures |
(64,396) |
(46,434) |
||||||
Operating cash flows used in continuing operations |
(20,639) |
(14,374) |
||||||
Operating cash flows provided by (used in) discontinued operations |
139 |
(118) |
||||||
Net cash used in operating activities |
(20,500) |
(14,492) |
||||||
Net cash provided by investing activities |
37,455 |
48,847 |
||||||
Net cash used in financing activities |
(20,296) |
(36,654) |
||||||
Net decrease in cash, cash equivalents and restricted cash |
$ |
(3,341) |
$ |
(2,299) |
|
||||||||
MARCH 31, |
|
|||||||
2018 |
2017 |
|||||||
Cash and cash equivalents |
$ |
295 |
$ |
424 |
||||
Restricted cash |
29,773 |
32,985 |
||||||
Accounts receivable, net |
261,336 |
188,300 |
||||||
Current assets before funds held for clients |
315,907 |
245,061 |
||||||
Funds held for clients |
147,655 |
203,112 |
||||||
|
631,956 |
613,206 |
||||||
Total assets |
$ |
1,214,353 |
$ |
1,176,231 |
||||
Notes payable, current |
$ |
1,743 |
$ |
1,861 |
||||
Current liabilities before client fund obligations |
139,687 |
130,664 |
||||||
Client fund obligations |
148,654 |
203,582 |
||||||
Notes payable, non-current |
1,824 |
2,164 |
||||||
Bank debt, net of debt issuance costs |
214,002 |
177,672 |
||||||
Total liabilities |
$ |
642,737 |
$ |
645,352 |
||||
|
$ |
(491,604) |
$ |
(491,046) |
||||
Total stockholders' equity |
$ |
571,616 |
$ |
530,879 |
||||
Debt to equity |
38.1 |
% |
34.2 |
% |
||||
Days sales outstanding (DSO) - continuing operations (1) |
92 |
72 |
||||||
Shares outstanding |
54,956 |
54,592 |
||||||
Basic weighted average common shares outstanding |
54,071 |
53,862 |
||||||
Diluted weighted average common shares outstanding |
55,924 |
55,689 |
(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 at |
|
||||||||
Income from Continuing Operations to Non-GAAP Financial Measures (1) |
||||||||
THREE MONTHS ENDED |
||||||||
MARCH 31, |
||||||||
2018 |
2017 |
|||||||
Income from continuing operations |
$ |
35,810 |
$ |
25,026 |
||||
Interest expense |
1,780 |
1,517 |
||||||
Income tax expense |
13,156 |
16,141 |
||||||
Gain on sale of operations, net |
(663) |
(22) |
||||||
Depreciation |
1,404 |
1,247 |
||||||
Amortization |
4,371 |
4,394 |
||||||
Adjusted EBITDA |
$ |
55,858 |
$ |
48,303 |
(1) |
|
Guidance on 2018 Earnings Per Diluted Share from Continuing Operations |
|||||||
Low |
High |
||||||
2018 outlook growth in earnings per share |
13 |
% |
17 |
% |
|||
2018 outlook earnings per share |
$ |
1.04 |
$ |
1.08 |
|||
2018 outlook growth in earnings per diluted share, excluding impact of Tax Reform Act |
20 |
% |
24 |
% |
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