FOR IMMEDIATE RELEASE

CONTACT:

Ware Grove

Chief Financial Officer

-or-

Lori Novickis

Director, Corporate Relations

CBIZ, Inc.

Cleveland, Ohio

(216) 447-9000

•

Total revenue increases 0.6%

•

Same-unit revenue down 1.4%

•

EPS from continuing operations increases 30.0%

•

Adjusted EBITDA increases 24.7%

•

Total revenue increases 1.8%

•

Same-unit revenue down 0.1%

•

EPS from continuing operations increases 8.2%

•

Adjusted EBITDA increases 7.4%

THREE MONTHS ENDED

JUNE 30,

2020

%

2019

%

Revenue

$

236,943

100.0

%

$

235,498

100.0

%

Operating expenses (1)

209,016

88.2

%

198,148

84.1

%

Gross margin

27,927

11.8

%

37,350

15.9

%

Corporate general and administrative expenses (1)

11,160

4.7

%

10,566

4.5

%

Operating income

16,767

7.1

%

26,784

11.4

%

Other income (expense):

Interest expense

(2,074

)

-0.9

%

(1,587

)

-0.7

%

Gain on sale of operations, net

57

0.0

%

50

0.0

%

Other income (expense), net (1) (2)

13,336

5.6

%

(3,311

)

-1.4

%

Total other income (expense), net

11,319

4.8

%

(4,848

)

-2.1

%

Income from continuing operations before income tax expense

28,086

11.9

%

21,936

9.3

%

Income tax expense

6,607

5,322

Income from continuing operations

21,479

9.1

%

16,614

7.1

%

Loss from operations of discontinued businesses, net of tax

(11

)

(22

)

Net income

$

21,468

9.1

%

$

16,592

7.0

%

Diluted earnings per share:

Continuing operations

$

0.39

$

0.30

Discontinued operations

-

-

Net income

$

0.39

$

0.30

Diluted weighted average common shares outstanding

55,116

55,495

Other data from continuing operations:

Adjusted EBITDA (3)

$

35,890

$

28,790

(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" ($12.2 million expense in 2020 and $3.0 million income in 2019, or 5.2% and 1.3% of revenue, respectively) and "Corporate general and administrative expenses" ($1.5 million expense in 2020 and $0.3 million income in 2019, respectively, or 0.6% and 0.1% of revenue, respectively) and are directly offset by deferred compensation income or expense in "Other income (expense), net" ($13.7 million income in 2020 and $3.4 million expense in 2019, or 5.8% and 1.4% of revenue, respectively). The deferred compensation plan has no impact on "Income from continuing operations before income tax expense".    

(2)

Included in "Other income (expense), net" for the three months ended June 30, 2020 and 2019, is expense of $0.5 million and $0.1 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 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. 

SIX MONTHS ENDED

JUNE 30,

2020

%

2019

%

Revenue

$

514,398

100.0

%

$

505,496

100.0

%

Operating expenses (1)

408,843

79.5

%

413,644

81.8

%

Gross margin

105,555

20.5

%

91,852

18.2

%

Corporate general and administrative expenses (1)

21,649

4.2

%

22,246

4.4

%

Operating income

83,906

16.3

%

69,606

13.8

%

Other (expense) income:

Interest expense

(3,193

)

-0.6

%

(2,988

)

-0.6

%

Gain on sale of operations, net

152

0.0

%

547

0.1

%

Other (expense) income, net (1) (2)

(2,464

)

-0.5

%

5,949

1.2

%

Total other (expense) income, net

(5,505

)

-1.1

%

3,508

0.7

%

Income from continuing operations before income tax expense

78,401

15.2

%

73,114

14.5

%

Income tax expense

20,060

18,935

Income from continuing operations

58,341

11.3

%

54,179

10.7

%

Loss from operations of discontinued businesses, net of tax

(25

)

(118

)

Net income

$

58,316

11.3

%

$

54,061

10.7

%

Diluted earnings per share:

Continuing operations

$

1.05

$

0.97

Discontinued operations

-

-

Net income

$

1.05

$

0.97

Diluted weighted average common shares outstanding

55,515

55,701

Other data from continuing operations:

Adjusted EBITDA (3)

$

92,933

$

86,531

(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" ($2.6 million income in 2020 and $5.2 million expense in 2019, or 0.5% and 1.0% of revenue, respectively) and "Corporate general and administrative expenses" ($0.3 million income in 2020 and $0.5 million expense in 2019, or 0.1% and 0.1% of revenue for 2020 and 2019, respectively) and are directly offset by deferred compensation income or expense in "Other (expense) income, net" ($2.9 million expense in 2020 and $5.7 million income in 2019, or 0.6% and 1.1% of revenue, respectively). The deferred compensation plan has no impact on "Income from continuing operations before income tax expense".    

(2)

Included in "Other (expense) income, net" for the six months ended June 30, 2020 and 2019, is income of $0.2 million and $0.2 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 nearest GAAP financial measure, and for additional information as to the usefulness of the Non-GAAP financial measures to shareholders and investors.

THREE MONTHS ENDED

SIX MONTHS ENDED

JUNE 30,

JUNE 30,

2020

2019

2020

2019

Revenue

Financial Services

$

154,083

$

154,373

$

342,860

$

339,517

Benefits and Insurance Services

73,940

72,127

153,552

148,382

National Practices

8,920

8,998

17,986

17,597

Total

$

236,943

$

235,498

$

514,398

$

505,496

Gross Margin

Financial Services

$

26,666

$

26,215

$

76,845

$

76,901

Benefits and Insurance Services

12,657

11,052

27,046

25,936

National Practices

930

794

1,713

1,393

Operating expenses - unallocated (1):

Other

(94

)

(3,719

)

(2,617

)

(7,168

)

Deferred compensation

(12,232

)

3,008

2,568

(5,210

)

Total

$

27,927

$

37,350

$

105,555

$

91,852

(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 a rabbi trust associated with the Company's deferred compensation plan. These gains or losses do not impact "Income from continuing operations 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 in "Operating expenses" and “Corporate, general and administrative expense,” and offset in "Other income (expense), net".

SIX MONTHS ENDED

JUNE 30,

2020

2019

Net income

$

58,316

$

54,061

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

Depreciation and amortization expense

11,491

10,976

Bad debt expense, net of recoveries

3,234

1,506

Adjustments to contingent earnout liability

(155

)

(193

)

Stock-based compensation expense

4,280

3,399

Other noncash adjustments

(312

)

72

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

76,854

69,821

Changes in assets and liabilities, net of acquisitions and divestitures

(21,286

)

(50,122

)

Operating cash flows provided by continuing operations

55,568

19,699

Operating cash used in discontinued operations

(45

)

(119

)

Net cash provided by operating activities

55,523

19,580

Net cash provided by (used in) investing activities

12,807

(10,879

)

Net cash used in financing activities

(70,560

)

(42,076

)

Net decrease in cash, cash equivalents and restricted cash

$

(2,230

)

$

(33,375

)

Cash, cash equivalents and restricted cash at beginning of year

146,505

130,554

Cash, cash equivalents and restricted cash at end of year

$

144,275

$

97,179

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

Cash and cash equivalents

$

9,620

$

2,628

Restricted Cash

42,411

30,126

Cash equivalents included in funds held for clients

92,244

64,425

Total cash, cash equivalents and restricted cash

$

144,275

$

97,179

JUNE 30,

DECEMBER 31,

2020

2019

Cash and cash equivalents

$

9,620

$

567

Restricted cash

42,411

29,595

Accounts receivable, net

267,198

222,031

Current assets before funds held for clients

341,701

276,518

Funds held for clients

130,473

179,502

Goodwill and other intangible assets, net

661,180

654,671

Total assets

$

1,427,608

$

1,400,774

Current liabilities before client fund obligations

$

203,357

$

186,906

Client fund obligations

129,942

179,020

Total long-term debt

119,013

104,333

Total liabilities

$

732,388

$

741,536

Treasury stock

$

(566,762

)

$

(535,693

)

Total stockholders' equity

$

695,220

$

659,238

Debt to equity

17.3

%

16.0

%

Days sales outstanding (DSO) - continuing operations (1)

87

75

Shares outstanding

54,655

55,419

Basic weighted average common shares outstanding

54,356

54,299

Diluted weighted average common shares outstanding

55,515

55,895

(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 June 30, 2019 was 90.

THREE MONTHS ENDED

SIX MONTHS ENDED

JUNE 30,

JUNE 30,

2020

2019

2020

2019

Income from continuing operations

$

21,479

$

16,614

$

58,341

$

54,179

Interest expense

2,074

1,587

3,193

2,988

Income tax expense

6,607

5,322

20,060

18,935

Gain on sale of operations, net

(57

)

(50

)

(152

)

(547

)

Depreciation

2,357

1,859

4,640

4,017

Amortization

3,430

3,458

6,851

6,959

Adjusted EBITDA

$

35,890

$

28,790

$

92,933

$

86,531

(1)

CBIZ reports its financial results in accordance with GAAP. This table reconciles Non-GAAP financial measures to the nearest GAAP financial measure, "Income from continuing operations". Adjusted EBITDA is not defined by GAAP and should not be regarded as an alternative or replacement to any measurement of performance or cash flow under GAAP. Adjusted EBITDA is commonly used by the Company, its shareholders and debt holders to evaluate, assess and benchmark the Company's operational results and to provide an additional measure with respect to the Company's ability to meet future debt obligations.