CBIZ REPORTS FOURTH-QUARTER AND FULL-YEAR 2023 RESULTS

CBIZ, INC.

FINANCIAL HIGHLIGHTS (UNAUDITED)

THREE MONTHS ENDED DECEMBER 31, 2023 AND 2022

(In thousands, except percentages and per share data)

Three Months Ended December 31,

2023

%

2022

%

Revenue

$ 327,547

100.0 %

$ 295,043

100.0 %

Operating expenses ⁽¹⁾

340,844

104.1

302,560

102.5

Gross loss

(13,297)

(4.1)

(7,517)

(2.5)

Corporate general and administrative expenses ⁽¹⁾

13,438

4.1

11,895

4.0

Operating loss

(26,735)

(8.2)

(19,412)

(6.5)

Other (expense) income:

Interest expense

(5,108)

(1.6)

(2,830)

(0.9)

Gain on sale of operations, net

—

—

102

—

Other income, net ^{(1) (2)}

12,774

3.9

5,689

1.9

Total other income, net

7,666

2.3

2,961

1.0

Loss before income tax benefit

(19,069)

(5.9)

(16,451)

(5.5)

Income tax benefit

(6,332)

(4,953)

Net loss

(12,737)

(3.9) %

(11,498)

(3.9) %

Diluted loss per share

$     (0.26)

$     (0.23)

Diluted weighted average common shares outstanding

49,795

50,538

Other data:

Adjusted EBITDA ⁽³⁾

$   (5,434)

$   (4,356)

Adjusted EPS ⁽³⁾

$     (0.26)

$     (0.21)

(1)

CBIZ sponsors a deferred compensation plan, under which a CBIZ employee's compensation deferral is held in a rabbi trust and invested 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 in "Other income, net." The deferred compensation plan has no impact on "Loss before income tax benefit."

Income and expenses related to the deferred compensation plan for the three months ended December 31, 2023, and 2022 are as follows (in thousands):

Three Months Ended December 31,

2023

% of Revenue

2022

% of Revenue

Operating expenses

$     10,339

3.2 %

$       5,748

1.9 %

Corporate general and administrative expenses

1,475

0.5 %

926

0.3 %

Other income, net

11,814

3.7 %

6,674

2.2 %

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

Three Months Ended December 31,

2023

2022

As
Reported

Deferred
Compensation
Plan

% of
Revenue

As
Reported

Deferred
Compensation
Plan

Adjusted

% of
Revenue

Gross (loss) margin

$ (13,297)

$     10,339

$   (2,958)

(0.9) %

$   (7,517)

$       5,748

$   (1,769)

(0.6) %

Operating loss

(26,735)

11,814

(14,921)

(4.6) %

(19,412)

6,674

(12,738)

(4.3) %

Other income (expense), net

12,774

(11,814)

960

0.3 %

5,689

(6,674)

(985)

(0.3) %

Loss before income tax benefit

(19,069)

—

(19,069)

(5.8) %

(16,451)

—

(16,451)

(5.6) %

(2)

Included in "Other income, net" for the three months ended December 31, 2023 and 2022, is expense of $0.7 million and $0.5 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 stockholders and investors.

CBIZ, INC.

FINANCIAL HIGHLIGHTS (UNAUDITED)

TWELVE MONTHS ENDED DECEMBER 31, 2023 AND 2022

(In thousands, except percentages and per share data)

Twelve Months Ended December 31,

2023

%

2022

%

Revenue

$ 1,591,194

100.0 %

$ 1,411,979

100.0 %

Operating expenses ⁽¹⁾

1,367,990

86.0

1,188,612

84.2

Gross margin

223,204

14.0

223,367

15.8

Corporate general and administrative expenses ⁽¹⁾

57,965

3.6

55,023

3.8

Operating income

165,239

10.4

168,344

12.0

Other income (expense):

Interest expense

(20,131)

(1.3)

(8,039)

(0.6)

Gain on sale of operations, net

176

—

413

—

Other income (expense), net ^{(1) (2)}

21,019

1.3

(19,243)

(1.4)

Total other income (expense), net

1,064

—

(26,869)

(2.0)

Income before income tax expense

166,303

10.4

141,475

10.0

Income tax expense

45,335

36,121

Net income

120,968

7.6 %

105,354

7.5 %

Diluted income per share

$        2.39

$       2.01

Diluted weighted average common shares outstanding

50,557

52,388

Other data:

Adjusted EBITDA ⁽³⁾

$  223,788

$  190,125

Adjusted EPS ⁽³⁾

$        2.41

$       2.13

(1)

CBIZ sponsors a deferred compensation plan, under which a CBIZ employee's compensation deferral is held in a rabbi trust and invested 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 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 twelve months ended December 31, 2023, and 2022 are as follows (in thousands):

Twelve Months Ended December 31,

2023

% of Revenue

2022

% of Revenue

Operating expenses (income)

$     17,192

1.1 %

$   (17,252)

(1.2) %

Corporate general and administrative expenses (income)

2,296

0.1 %

(2,393)

(0.2) %

Other income (expense), net

19,488

1.2 %

(19,645)

(1.4) %

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

Twelve Months Ended December 31,

2023

2022

As
Reported

Deferred
Compensation
Plan

Adjusted

% of
Revenue

As
Reported

Deferred
Compensation
Plan

Adjusted

% of
Revenue

Gross margin

$ 223,204

$     17,192

$ 240,396

15.1 %

$ 223,367

$    (17,252)

$ 206,115

14.6 %

Operating income

165,239

19,488

184,727

11.6 %

168,344

(19,645)

148,699

10.5 %

Other income (expense), net

21,019

(19,488)

1,531

0.1 %

(19,243)

19,645

402

— %

Income before income tax expense

166,303

—

166,303

10.5 %

141,475

—

141,475

10.0 %

(2)

Included in "Other income (expense), net" for the twelve months ended December 31, 2023 and 2022, is expense of $2.7 million and $2.4 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 stockholders and investors.

CBIZ, INC.

FINANCIAL HIGHLIGHTS (UNAUDITED)

(In thousands)

SELECT SEGMENT DATA

Three Months Ended December 31,

Twelve Months Ended December 31,

2023

2022

2023

2022

Revenue

Financial Services

$      228,298

$      202,016

1,160,686

1,010,068

Benefits and Insurance Services

86,426

81,746

382,605

358,007

National Practices

12,823

11,281

47,903

43,904

Total

$      327,547

$      295,043

$   1,591,194

$   1,411,979

Gross Margin

Financial Services ⁽¹⁾

(9,210)

(8,242)

185,610

$      160,030

Benefits and Insurance Services

10,849

12,357

72,095

67,620

National Practices

1,558

1,298

4,843

4,703

Operating expenses - unallocated ⁽²⁾

Other expense

(6,155)

(7,182)

(22,152)

(26,238)

Deferred compensation

(10,339)

(5,748)

(17,192)

17,252

Total

$      (13,297)

$        (7,517)

$      223,204

$      223,367

(1)

Gross margin for the Financial Services practice group included approximately $0.1 million and $1.2 million of one-time and non-recurring integration and retention costs related to Somerset for the three months and twelve months ended December 31, 2023, respectively. Gross margin for the Financial Services practice group included approximately $0.8 million and $6.7 million of one-time and non-recurring integration and retention costs related to Marks Paneth for the three months and twelve months ended December 31, 2022, respectively.

(2)

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, 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 in "Operating expenses" and "Corporate, general and administrative expenses," and offset in "Other income, net."

CBIZ, INC.

SELECT CASH FLOW DATA

(In thousands)

Twelve Months Ended December 31,

2023

2022

Net income

$       120,968

$       105,354

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization expense

36,269

32,895

Gain on sale of operations, net

(176)

(413)

Bad debt expense, net of recoveries

1,551

1,173

Adjustments to contingent earnout liability, net

2,743

2,435

Stock-based compensation expense

12,286

14,689

Other noncash adjustments

8,908

12,042

Net income, after adjustments to reconcile net income to net cash provided by operating activities

182,549

168,175

Changes in assets and liabilities, net of acquisitions and divestitures

(29,042)

(42,043)

Net cash provided by operating activities

153,507

126,132

Net cash used in investing activities

(79,393)

(99,118)

Net cash used in financing activities

(77,111)

(17,343)

Net (decrease) increase in cash, cash equivalents and restricted cash

(2,997)

9,671

Cash, cash equivalents and restricted cash at beginning of year

$       160,145

$       150,474

Cash, cash equivalents and restricted cash at end of period

$       157,148

$       160,145

Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheet:

Cash and cash equivalents

$           8,090

$           4,697

Restricted cash

30,362

28,487

Cash equivalents included in funds held for clients

118,696

126,961

Total cash, cash equivalents and restricted cash

$       157,148

$       160,145

CBIZ, INC.

SELECT FINANCIAL DATA AND RATIOS

(In thousands)

December 31, 2023

December 31, 2022

Cash and cash equivalents

8,090

4,697

Restricted cash

30,362

28,487

Accounts receivable, net

380,152

334,498

Current assets before funds held for clients

453,499

397,113

Funds held for clients

159,186

171,313

Goodwill and other intangible assets, net

1,008,604

951,702

Total assets

2,043,592

1,879,124

Current liabilities before client fund obligations

352,028

338,940

Client fund obligations

159,893

173,467

Total long-term debt, net

310,826

263,654

Total liabilities

1,251,974

1,165,672

Treasury stock

(899,093)

(824,778)

Total stockholders' equity

791,618

713,452

Debt to equity

39.3 %

37.0 %

Days sales outstanding (DSO) ⁽¹⁾

78

74

Shares outstanding

49,814

50,180

Basic weighted average common shares outstanding

49,989

51,502

Diluted weighted average common shares outstanding

50,557

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.

CBIZ, INC.

GAAP RECONCILIATION

Net (Loss) Income and Diluted Earnings Per Share ("EPS") to Adjusted Net (Loss), EPS and EBITDA⁽¹⁾

(In thousands, except per share data)

Three Months Ended
December 31, 2023

Three Months Ended

December 31, 2022

Amounts

EPS

Amounts

EPS

Net loss

$      (12,737)

$         (0.26)

$      (11,498)

$         (0.23)

Adjustments:

Gain on sale of assets, net

(1,363)

(0.03)

—

—

Integration and retention costs related to acquisitions ⁽²⁾

331

0.01

1,179

$           0.02

Facility optimization costs ⁽³⁾

255

0.01

—

—

Income tax effect related to adjustments

258

0.01

(355)

—

Adjusted net loss

$      (13,256)

$         (0.26)

$      (10,674)

$         (0.21)

Interest expense

$         5,108

$         2,830

Income tax benefit

(6,332)

(4,953)

Gain on sale of operations, net

—

(102)

Tax effect related to the adjustments above

(258)

355

Depreciation

3,301

2,853

Amortization

6,003

5,335

Adjusted EBITDA

$       (5,434)

$       (4,356)

Twelve Months Ended
December 31, 2023

Twelve Months Ended

December 31, 2022

Amounts

EPS

Amounts

EPS

Net income

$     120,968

$           2.39

$     105,354

$           2.01

Adjustments:

Gain on sale of assets, net

(2,863)

(0.06)

(2,391)

(0.05)

Transaction costs related to acquisitions ⁽²⁾

611

0.01

1,329

0.03

Integration and retention costs related to acquisitions ⁽²⁾

2,782

0.06

9,191

0.18

Facility optimization costs ⁽³⁾

731

0.02

—

—

Income tax effect related to adjustments

(344)

(0.01)

(2,075)

(0.04)

Adjusted net income

$     121,885

$           2.41

$     111,408

$           2.13

Interest expense

$       20,131

$         8,039

Income tax expense

45,335

36,121

Gain on sale of operations, net

(176)

(413)

Tax effect related to the adjustments above

344

2,075

Depreciation

12,475

11,231

Amortization

23,794

21,664

Adjusted EBITDA

$     223,788

$     190,125

(1)

CBIZ reports its financial results in accordance with GAAP. This table reconciles Adjusted net (loss) income, Adjusted EPS, and Adjusted EBITDA to the most directly comparable GAAP financial measures, "Net (loss) income" and "Diluted earnings per share." Adjusted net (loss) income, Adjusted EPS and Adjusted EBITDA are not defined by GAAP and should not be regarded as an alternative or replacement to any financial information determined under GAAP. Adjusted net (loss) income, Adjusted EPS and Adjusted EBITDA exclude significant non-operating related gains and losses that management does not consider on-going in nature. These Non-GAAP financial measures are used by the Company as a performance measure to evaluate, assess and benchmark the Company's operational results and to evaluate results relative to employee compensation targets. Accordingly, the Company believes the presentation of these Non-GAAP financial measures allows its stockholders, debt holders, and other interested parties to meaningfully compare the Company's period-to-period operating 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.

(3)

These costs related to incremental non-recurring lease expense incurred as a result of CBIZ's real estate optimization efforts.

CBIZ, INC.

GAAP RECONCILIATION

Full Year 2024 Diluted Earnings Per Share ("EPS") Guidance to Full Year 2024 Adjusted Diluted EPS

Full Year 2024 Guidance

Low

High

Diluted EPS - GAAP Guidance

$                2.70

$                  2.75

Adjusted Diluted EPS Guidance

$                2.70

$                  2.75

GAAP Diluted EPS for 2023

$                2.39

$                  2.39

Adjusted Diluted EPS for 2023

$                2.41

$                  2.41

GAAP Diluted EPS Range

13 %

15 %

Adjusted Diluted EPS Range

12 %

14 %