CBIZ, Inc. (NYSE:CBZ) Q3 2021 Earnings Conference Call October 28, 2021 11:00 AM ET Company Participants Lori Novickis - Director of Corporate Relations Jerome Grisko - President and Chief Executive Officer Ware Grove - SVP and CFO Conference Call Participants Christopher Moore - CJS Securities Marc Reddick - Sidoti & Company Operator Good day and welcome to the CBIZ Third Quarter 2021 Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. After today’s presentatio ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, $0.01 Par Value CBZ New York Stock Exchange FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 193 ...

THIRD QUARTER 2021 INVESTOR PRESENTATION Your Team. Local. Trusted. Nationwide. October 28, 2021 Your Team. FORWARD-LOOKING STATEMENTS & NON-GAAP MEASURES Forward-looking statements in this presentation are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forwardlooking 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 l ...

CBIZ, Inc. (NYSE:CBZ) Q2 2021 Earnings Conference Call July 29, 2021 11:00 AM ET Company Participants Lori Novickis - Director-Corporate Relations Jerry Grisko - President & Chief Executive Officer Ware Grove - Chief Financial Officer Conference Call Participants Chris Moore - CJS Securities Marc Riddick - Sidoti & Company Operator Good day, and welcome to the CBIZ' Second Quarter 2021 Results Conference Call. All participants will be in the listen-only mode. [Operator Instructions] Please note, that this e ...

PART I. FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for CBIZ, Inc [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents CBIZ's unaudited condensed consolidated financial statements, including balance sheets, income statements, cash flows, and notes, for Q2 and H1 2021 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$1.66 billion** by June 30, 2021, driven by acquisitions, while liabilities rose due to bank debt, and equity saw a modest increase Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 (in thousands) | December 31, 2020 (in thousands) | | :--- | :--- | :--- | | **Total Assets** | **$1,656,628** | **$1,513,754** | | Goodwill and other intangible assets, net | $807,939 | $756,750 | | **Total Liabilities** | **$944,296** | **$811,134** | | Bank debt | $163,300 | $108,000 | | **Total Stockholders' Equity** | **$712,332** | **$702,620** | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Q2 2021 revenue grew **17.6%** to **$278.6 million**, but net income significantly decreased to **$8.6 million** due to a **$30.5 million** legal settlement Q2 Financial Performance (in thousands, except per share data) | Metric | Q2 2021 (in thousands) | Q2 2020 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | $278,648 | $236,943 | +17.6% | | Operating (Loss) Income | $(2,570) | $16,767 | -115.3% | | Net Income | $8,607 | $21,468 | -59.9% | | Diluted EPS | $0.16 | $0.39 | -59.0% | Six-Month Financial Performance (in thousands, except per share data) | Metric | H1 2021 (in thousands) | H1 2020 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | $579,378 | $514,398 | +12.6% | | Operating Income | $59,706 | $83,906 | -28.8% | | Net Income | $58,816 | $58,316 | +0.9% | | Diluted EPS | $1.09 | $1.05 | +3.8% | - A one-time legal settlement of **$30.5 million** was recorded in Q2 2021, which significantly impacted operating and net income for the period[12](index=12&type=chunk)[31](index=31&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities increased to **$66.3 million** in H1 2021, with significant cash usage for acquisitions and share repurchases Six-Month Cash Flow Summary (in thousands) | Cash Flow Activity | H1 2021 (in thousands) | H1 2020 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $66,294 | $55,523 | | Net cash (used in) provided by investing activities | $(40,137) | $12,807 | | Net cash used in financing activities | $(42,582) | $(70,560) | - Key uses of cash in H1 2021 included **$43.2 million** for business acquisitions and **$64.5 million** for treasury stock repurchases[19](index=19&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, debt, legal contingencies, and business combinations, highlighting a **$41.5 million** legal settlement and four H1 2021 acquisitions - On June 24, 2021, CBIZ settled a lawsuit with UPMC for a total of **$41.5 million**, resulting in a recorded one-time settlement loss of **$30.5 million** in the second quarter[31](index=31&type=chunk) - During the first six months of 2021, the company completed four acquisitions: Middle Market Advisory Group (MMA), Wright Retirement Services, Bernston Porter & Company (BP), and Optumas[46](index=46&type=chunk)[47](index=47&type=chunk) Aggregated Acquisition Details (H1 2021 vs H1 2020, in thousands) | Metric | 2021 (in thousands) | 2020 (in thousands) | | :--- | :--- | :--- | | Total Recorded Purchase Price | $67,288 | $15,057 | | Cash Paid | $43,104 | $9,443 | | Goodwill | $39,017 | $11,158 | | Estimated Annualized Revenue | $41,900 | $6,100 | - In H1 2021, the company sold one business in the Benefit and Insurance practice group for **$9.7 million**, recording a gain of **$6.4 million**[51](index=51&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2021 revenue growth of **17.6%**, segment performance, the impact of a major legal settlement, and capital allocation priorities [Executive Summary & Results of Operations](index=24&type=section&id=Executive%20Summary%20%26%20Results%20of%20Operations) Q2 2021 revenue increased **17.6%** to **$278.6 million**, but a **$30.5 million** legal settlement significantly impacted net income and diluted EPS Revenue Growth Summary (Q2 & H1 2021) | Period | Total Revenue Growth (%) | Same-Unit Revenue Growth (%) | Acquired Revenue Growth (net) (%) | | :--- | :--- | :--- | :--- | | **Q2 2021** | 17.6% | 10.5% | 7.1% | | **H1 2021** | 12.6% | 6.8% | 5.9% | - A settlement loss of **$30.5 million** was recorded for the three and six months ended June 30, 2021, related to a lawsuit with UPMC[81](index=81&type=chunk) - Interest expense decreased by **53.8%** in Q2 and **42.5%** in H1 2021 compared to 2020, driven by lower average debt balances[82](index=82&type=chunk)[85](index=85&type=chunk) [Operating Practice Groups](index=28&type=section&id=Operating%20Practice%20Groups) Financial Services led growth with **21.1%** revenue increase in Q2, while Benefits and Insurance Services also grew, and National Practices remained stable Financial Services Performance (Q2 2021 vs Q2 2020) | Metric | Q2 2021 ($M) | Q2 2020 ($M) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $186.6M | $154.1M | +21.1% | | Same-unit Revenue Growth | +13.3% | - | - | | Gross Margin % | 19.1% | 17.3% | +180 bps | Benefits and Insurance Services Performance (Q2 2021 vs Q2 2020) | Metric | Q2 2021 ($M) | Q2 2020 ($M) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $82.6M | $73.9M | +11.7% | | Same-unit Revenue Growth | +5.3% | - | - | | Gross Margin % | 18.0% | 17.1% | +90 bps | - The National Practices group revenue is primarily driven by a cost-plus contract with a single client, which accounts for approximately **75%** of the segment's revenue[113](index=113&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$233.4 million** available on its credit facility, prioritizing strategic acquisitions and share repurchases - Days Sales Outstanding (DSO) was **84 days** at June 30, 2021, compared to **87 days** at June 30, 2020, and **72 days** at December 31, 2020[119](index=119&type=chunk) - As of June 30, 2021, the company had **$163.3 million** outstanding on its credit facility with approximately **$233.4 million** of available funds[126](index=126&type=chunk) - In the first half of 2021, CBIZ completed four acquisitions for **$43.1 million** in cash and repurchased **2.1 million shares** of its common stock for approximately **$66.5 million**[128](index=128&type=chunk)[66](index=66&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate risk on floating-rate debt, mitigated by interest rate swaps, with no speculative derivative use - A 100 basis point change in market interest rates would impact annual interest expense by approximately **$0.8 million**[139](index=139&type=chunk) - As of June 30, 2021, the company had three interest rate swaps outstanding with a total notional value of **$85.0 million**, effectively fixing the interest rate on a significant portion of its variable-rate debt[141](index=141&type=chunk)[33](index=33&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting - Based on their evaluation, the CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[146](index=146&type=chunk) - No changes were made to internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[147](index=147&type=chunk) PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, and other required disclosures, referencing prior filings where applicable [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) Legal proceedings information is incorporated by reference from Note 5, detailing the UPMC settlement and ongoing litigation - Information regarding legal proceedings is incorporated by reference from Note 5, Commitments and Contingencies[151](index=151&type=chunk)[31](index=31&type=chunk) [Item 1A. Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported since the Annual Report on Form 10-K for the year ended December 31, 2020 - The company directs investors to review the risk factors discussed in its Annual Report on Form 10-K for the year ended December 31, 2020[152](index=152&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company issued **53,000 shares** for contingent consideration and repurchased **964,000 shares** in Q2 2021 under its buyback plan - In H1 2021, approximately **53,000 shares** of common stock were issued as payment for contingent consideration for previous acquisitions in unregistered transactions[153](index=153&type=chunk) Share Repurchases (Q2 2021) | Period | Total Shares Purchased (shares) | Average Price Paid Per Share ($) | | :--- | :--- | :--- | | April 2021 | 314,000 | $33.44 | | May 2021 | 367,000 | $34.03 | | June 2021 | 283,000 | $33.04 | | **Q2 Total** | **964,000** | **$33.55** | - As of June 30, 2021, a maximum of **4,036,000 shares** may yet be purchased under the current share repurchase plan[156](index=156&type=chunk) [Item 3. Defaults Upon Senior Securities](index=39&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section is not applicable as the company reports no defaults upon senior securities [Item 4. Mine Safety Disclosures](index=39&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable as the company has no mine safety disclosures to report [Item 5. Other Information](index=39&type=section&id=Item%205.%20Other%20Information) This section is not applicable as the company reports no other information [Item 6. Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including required certifications and XBRL data files

SECOND QUARTER 2021 INVESTOR PRESENTATION Your Team. Local. Trusted. Nationwide. July 29, 2021 Your Team. FORWARD-LOOKING STATEMENTS & NON-GAAP MEASURES Forward-looking statements in this presentation are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forwardlooking 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 lim ...

CBIZ, Inc. (NYSE:CBZ) Q1 2021 Earnings Conference Call April 29, 2021 11:00 AM ET Company Participants Lori Novickis - Director, Corporate Relations Jerry Grisko - President and Chief Executive Officer Ware Grove - Chief Financial Officer Conference Call Participants Andrew Nicholas - William Blair Marc Riddick - Sidoti & Company Chris Moore - CJS Securities Operator Good morning. Welcome to CBIZ' First Quarter 2021 Results Conference Call. [Operator Instructions] Please note that this event is being record ...

FIRST QUARTER 2021 INVESTOR PRESENTATION Your Team. Local. Trusted. Nationwide. April 29, 2021 Your Team. FORWARD-LOOKING STATEMENTS & NON-GAAP MEASURES Forward-looking statements in this presentation are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forwardlooking 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 lim ...

PART I. FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents unaudited financial statements, including balance sheets, income, equity, and cash flows [Condensed Consolidated Balance Sheets – March 31, 2021 and December 31, 2020](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20%E2%80%93%20March%2031%2C%202021%20and%20December%2031%2C%202020) Balance Sheet Summary | Metric | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :--- | :--- | :--- | | Total Assets | $1,551,843 | $1,513,754 | | Total Liabilities | $824,060 | $811,134 | | Total Stockholders' Equity | $727,783 | $702,620 | | Current Assets | $471,475 | $436,431 | | Current Liabilities | $333,674 | $378,274 | [Condensed Consolidated Statements of Comprehensive Income – Three Months Ended March 31, 2021 and 2020](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%E2%80%93%20Three%20Months%20Ended%20March%2031%2C%202021%20and%202020) Income Statement Summary | Metric | Three Months Ended March 31, 2021 (in thousands, except per share data) | Three Months Ended March 31, 2020 (in thousands, except per share data) | | :--- | :--- | :--- | | Revenue | $300,730 | $277,455 | | Operating Income | $62,276 | $67,139 | | Net Income | $50,209 | $36,848 | | Basic EPS | $0.94 | $0.68 | | Diluted EPS | $0.92 | $0.66 | | Comprehensive Income | $51,063 | $35,596 | [Condensed Consolidated Statements of Stockholders' Equity – Three Months Ended March 31, 2021 and 2020](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20%E2%80%93%20Three%20Months%20Ended%20March%2031%2C%202021%20and%202020) Stockholders' Equity Changes | Metric | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :--- | :--- | :--- | | Total Stockholders' Equity | $727,783 | $702,620 | | Net Income | $50,209 | $50,209 | | Share Repurchases | $(34,142) | $(34,142) | | Stock Options Exercised | $4,408 | $4,408 | [Condensed Consolidated Statements of Cash Flows – Three Months Ended March 31, 2021 and 2020](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%E2%80%93%20Three%20Months%20Ended%20March%2031%2C%202021%20and%202020) Cash Flow Summary | Cash Flow Activity | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(14,827) | $(18,647) | | Net cash provided by investing activities | $229 | $4,355 | | Net cash (used in) provided by financing activities | $(2,960) | $207,772 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(17,558) | $193,480 | [Notes to the Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) [NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=8&type=section&id=NOTE%201.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) - CBIZ, Inc provides professional business services to small and medium-sized businesses, individuals, and governmental and not-for-profit entities[18](index=18&type=chunk) - The company reports its operations across three practice groups: **Financial Services, Benefits and Insurance Services, and National Practices**[18](index=18&type=chunk) - The financial statements are prepared in accordance with GAAP and SEC rules for interim financial reporting, reflecting all normal recurring adjustments[18](index=18&type=chunk) [NOTE 2. NEW ACCOUNTING PRONOUNCEMENTS](index=8&type=section&id=NOTE%202.%20NEW%20ACCOUNTING%20PRONOUNCEMENTS) - The FASB issued ASU No 2020-04 and ASU No 2021-01, Reference Rate Reform (Topic 848), providing optional expedients for transactions affected by the transition from LIBOR[21](index=21&type=chunk) - The company is evaluating the effect of these new standards and **has not adopted any transition relief** as of March 31, 2021[21](index=21&type=chunk) [NOTE 3. ACCOUNTS RECEIVABLE, NET](index=10&type=section&id=NOTE%203.%20ACCOUNTS%20RECEIVABLE%2C%20NET) Accounts Receivable Breakdown | Metric | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :--- | :--- | :--- | | Trade accounts receivable | $177,104 | $167,575 | | Unbilled revenue | $106,662 | $63,494 | | Total accounts receivable | $283,766 | $231,069 | | Allowance for doubtful accounts | $(13,156) | $(14,894) | | Accounts receivable, net | $270,610 | $216,175 | Allowance for Doubtful Accounts Activity | Allowance for Doubtful Accounts Activity | Three Months Ended March 31, 2021 (in thousands) | | :--- | :--- | | Balance at beginning of period | $(14,894) | | Provision | $(390) | | Charge-offs, net of recoveries | $2,128 | | Allowance for doubtful accounts | $(13,156) | [NOTE 4. DEBT AND FINANCING ARRANGEMENTS](index=11&type=section&id=NOTE%204.%20DEBT%20AND%20FINANCING%20ARRANGEMENTS) - The outstanding balance under the **$400 million unsecured 2018 credit facility increased to $162.0 million** at March 31, 2021, from $108.0 million at December 31, 2020[26](index=26&type=chunk) - Available funds under the credit facility were approximately **$228.7 million** at March 31, 2021, net of outstanding letters of credit[26](index=26&type=chunk) Interest Rate and Expense | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Weighted average interest rates | 2.10% | 2.50% | | Interest expense (in thousands) | $877 | $1,119 | [NOTE 5. COMMITMENTS AND CONTINGENCIES](index=11&type=section&id=NOTE%205.%20COMMITMENTS%20AND%20CONTINGENCIES) - The company is a defendant in several legal proceedings, with claims ranging from **~$16.0 million to potentially $177.0 million**[29](index=29&type=chunk) - The outcome of these legal matters cannot be predicted, and the company intends to **vigorously defend these cases**[29](index=29&type=chunk) Commitments | Commitment | March 31, 2021 (in millions) | December 31, 2020 (in millions) | | :--- | :--- | :--- | | Letters of Credit | $3.0 | $1.7 | | License Bonds | $2.3 | $2.2 | [NOTE 6. FINANCIAL INSTRUMENTS](index=12&type=section&id=NOTE%206.%20FINANCIAL%20INSTRUMENTS) - The company invests client funds in available-for-sale debt securities with a fair value of **$22.393 million** at March 31, 2021[30](index=30&type=chunk)[32](index=32&type=chunk) - Interest rate swaps are utilized to manage interest rate risk, with three swaps outstanding having a total notional value of **$85.0 million**[32](index=32&type=chunk) Gains/Losses in AOCL | Metric | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | | :--- | :--- | :--- | | Gain (Loss) Recognized in AOCL, net of tax | $961 | $(653) | [NOTE 7. FAIR VALUE MEASUREMENTS](index=14&type=section&id=NOTE%207.%20FAIR%20VALUE%20MEASUREMENTS) - Contingent purchase price liabilities, measured at Level 3 fair value, are estimated using a **probability-weighted discounted cash flow model**[34](index=34&type=chunk) Fair Value of Assets and Liabilities | Asset/Liability | Level | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :--- | :--- | :--- | :--- | | Deferred compensation plan assets | 1 | $133,478 | $127,332 | | Available-for-sale debt securities | 1 | $22,393 | $25,708 | | Deferred compensation plan liabilities | 1 | $(133,478) | $(127,332) | | Interest rate swaps | 2 | $(1,299) | $(2,565) | | Contingent purchase price liabilities | 3 | $(54,230) | $(54,391) | [NOTE 8. OTHER COMPREHENSIVE INCOME (LOSS)](index=14&type=section&id=NOTE%208.%20OTHER%20COMPREHENSIVE%20INCOME%20(LOSS)) Components of Other Comprehensive Income (Loss) | Component | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | | :--- | :--- | :--- | | Net unrealized loss on available-for-sale securities, net of income taxes | $(103) | $(587) | | Net unrealized gain (loss) on interest rate swaps, net of income taxes | $961 | $(653) | | Foreign currency translation | $(4) | $(12) | | Total other comprehensive income (loss) | $854 | $(1,252) | [NOTE 9. EMPLOYEE STOCK PLANS](index=15&type=section&id=NOTE%209.%20EMPLOYEE%20STOCK%20PLANS) Stock-Based Compensation Expense | Metric | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | | :--- | :--- | :--- | | Stock options compensation expense | $301 | $421 | | Restricted stock units and awards compensation expense | $1,381 | $1,171 | | Performance share units compensation expense | $1,173 | $431 | | Total stock-based compensation expense | $2,855 | $2,023 | Stock Options Activity | Stock Options Activity (in thousands, except per share data) | Number of Stock Options | Weighted Average Exercise Price Per Share | | :--- | :--- | :--- | | Outstanding at beginning of year | 1,820 | $15.02 | | Exercised or released | (397) | $11.10 | | Outstanding at March 31, 2021 | 1,423 | $16.12 | Performance Share Units Activity | Performance Share Units Activity (in thousands, except per share data) | Performance Share Units | Weighted Average Grant-Date Fair Value Per Unit | | :--- | :--- | :--- | | Outstanding at beginning of year | 307 | $22.18 | | Granted | 140 | $27.56 | | Outstanding at March 31, 2021 | 447 | $23.86 | [NOTE 10. EARNINGS PER SHARE](index=16&type=section&id=NOTE%2010.%20EARNINGS%20PER%20SHARE) - A total of **447 thousand and 332 thousand performance share units** were excluded from diluted EPS calculation for Q1 2021 and Q1 2020, respectively[42](index=42&type=chunk) Earnings Per Share Calculation | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Income from continuing operations (in thousands) | $50,216 | $36,862 | | Basic earnings per share from continuing operations | $0.94 | $0.68 | | Diluted earnings per share from continuing operations | $0.92 | $0.66 | | Weighted average common shares outstanding (Basic) (in thousands) | 53,366 | 54,571 | | Diluted weighted average common shares outstanding (in thousands) | 54,436 | 55,945 | [NOTE 11. BUSINESS COMBINATIONS](index=17&type=section&id=NOTE%2011.%20BUSINESS%20COMBINATIONS) - The company's acquisition strategy focuses on businesses with strong culture, client service, and **cross-serving potential**[45](index=45&type=chunk) - In Q1 2021, CBIZ acquired Middle Market Advisory Group (MMA) for approximately **$3.5 million**, adding an estimated **$3.6 million** in annualized revenue[46](index=46&type=chunk) - In Q1 2020, CBIZ completed three acquisitions for approximately **$15.1 million**, adding an estimated **$6.1 million** in annualized revenue[46](index=46&type=chunk)[48](index=48&type=chunk) - Goodwill arising from acquisitions was **$1.5 million in Q1 2021** and **$11.2 million in Q1 2020**[48](index=48&type=chunk) [NOTE 12. SEGMENT DISCLOSURES](index=18&type=section&id=NOTE%2012.%20SEGMENT%20DISCLOSURES) - The company's business units are aggregated into three practice groups: **Financial Services, Benefits and Insurance Services, and National Practices**[49](index=49&type=chunk) Revenue by Segment | Segment | Three Months Ended March 31, 2021 Revenue (in thousands) | Three Months Ended March 31, 2020 Revenue (in thousands) | | :--- | :--- | :--- | | Financial Services | $204,149 | $188,777 | | Benefits and Insurance Services | $87,239 | $79,612 | | National Practices | $9,342 | $9,066 | | Total Revenue | $300,730 | $277,455 | Operating Income by Segment | Segment | Three Months Ended March 31, 2021 Operating Income (in thousands) | Three Months Ended March 31, 2020 Operating Income (in thousands) | | :--- | :--- | :--- | | Financial Services | $62,403 | $50,179 | | Benefits and Insurance Services | $20,306 | $14,389 | | National Practices | $801 | $783 | [NOTE 13. SUBSEQUENT EVENTS](index=20&type=section&id=NOTE%2013.%20SUBSEQUENT%20EVENTS) - Subsequent to March 31, 2021, the company repurchased approximately **0.3 million shares** of common stock for **$9.0 million**[55](index=55&type=chunk) - Effective April 1, 2021, CBIZ acquired Wright Retirement Services, LLC, adding an estimated **$1.2 million** in annualized revenue[55](index=55&type=chunk) - Effective May 1, 2021, CBIZ acquired the non-attest assets of Berntson Porter & Company, PLLC, adding an estimated **$26.0 million** in annualized revenue[55](index=55&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, condition, and cash flows for Q1 2021 compared to the prior year [OVERVIEW](index=21&type=section&id=OVERVIEW) - CBIZ provides professional business services, products, and solutions to help clients manage finances and employees[59](index=59&type=chunk) - Services are delivered through three practice groups: **Financial Services, Benefits and Insurance Services, and National Practices**[59](index=59&type=chunk) [EXECUTIVE SUMMARY](index=21&type=section&id=EXECUTIVE%20SUMMARY) - The company's first priority for capital use is **strategic acquisitions**, followed by share repurchases[62](index=62&type=chunk) - In Q1 2021, CBIZ completed one acquisition for approximately **$3.5 million** and repurchased **1.2 million shares** for **$34.1 million**[62](index=62&type=chunk) - The Board authorized a new Share Repurchase Program for up to **5.0 million shares**, effective April 1, 2021[63](index=63&type=chunk) Financial Highlights | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue (in millions) | $300.7 | $277.5 | $23.2 | 8.4% | | Same-unit revenue growth (in millions) | ~$10.0 | N/A | N/A | 3.6% | | Acquired operations revenue contribution (in millions) | $13.3 | N/A | N/A | 4.8% | | Income from continuing operations (in millions) | $50.2 | $36.9 | $13.3 | 36.0% | | Diluted EPS | $0.92 | $0.66 | $0.26 | 39.4% | [RESULTS OF OPERATIONS – CONTINUING OPERATIONS](index=21&type=section&id=RESULTS%20OF%20OPERATIONS%20%E2%80%93%20CONTINUING%20OPERATIONS) [Revenue](index=21&type=section&id=Revenue) Revenue by Segment | Segment | 2021 Revenue (in thousands) | % of Total 2021 | 2020 Revenue (in thousands) | % of Total 2020 | $ Change (YoY) | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Financial Services | $204,149 | 67.9% | $188,777 | 68.0% | $15,372 | 8.1% | | Benefits and Insurance Services | $87,239 | 29.0% | $79,612 | 28.7% | $7,627 | 9.6% | | National Practices | $9,342 | 3.1% | $9,066 | 3.3% | $276 | 3.0% | | Total CBIZ | $300,730 | 100.0% | $277,455 | 100.0% | $23,275 | 8.4% | [Non-qualified Deferred Compensation Plan](index=22&type=section&id=Non-qualified%20Deferred%20Compensation%20Plan) - The company sponsors a non-qualified deferred compensation plan where employee deferrals are held in a rabbi trust[67](index=67&type=chunk) - Income and expenses related to the plan are offset, resulting in **no impact on pre-tax income or diluted EPS**[67](index=67&type=chunk) [Operating Expenses](index=22&type=section&id=Operating%20Expenses) - The increase in operating expenses was primarily driven by **$13.6 million higher personnel costs**, offset by lower travel, bad debt, and discretionary spending[69](index=69&type=chunk) Operating Expense Analysis | Metric | 2021 (in thousands) | 2020 (in thousands) | $ Change (YoY) | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | Operating expenses | $223,971 | $199,827 | $24,144 | 12.1% | | Operating expenses % of revenue | 74.5% | 72.0% | N/A | N/A | | Operating expenses excluding deferred compensation | $219,355 | $214,627 | $4,728 | 2.2% | [Corporate General & Administrative ("G&A") Expenses](index=22&type=section&id=Corporate%20General%20%26%20Administrative%20(%22G%26A%22)%20Expenses) - The increase in G&A expenses was primarily due to **$1.2 million higher personnel costs** and **$0.5 million higher other costs** to support business growth[71](index=71&type=chunk) G&A Expense Analysis | Metric | 2021 (in thousands) | 2020 (in thousands) | $ Change (YoY) | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | G&A expenses | $14,483 | $10,489 | $3,994 | 38.1% | | G&A expenses % of revenue | 4.8% | 3.8% | N/A | N/A | | G&A expenses excluding deferred compensation | $13,987 | $12,293 | $1,694 | 13.8% | [Other Income (Expense), Net](index=23&type=section&id=Other%20Income%20(Expense)%2C%20Net) - Other income for Q1 2021 includes a net gain of **$5.1 million** from the non-qualified deferred compensation plan[74](index=74&type=chunk) - For Q1 2020, other expense included a net loss of **$16.6 million** from the non-qualified deferred compensation plan[74](index=74&type=chunk) Other Income (Expense) Breakdown | Metric | 2021 (in thousands) | 2020 (in thousands) | $ Change (YoY) | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | Interest expense | $(877) | $(1,119) | $242 | (21.6)% | | Gain on sale of operations, net | — | $95 | $(95) | (100.0)% | | Other income (expense), net | $4,789 | $(15,800) | $20,589 | (130.3)% | | Total other income, net | $3,912 | $(16,824) | $20,736 | (123.3)% | [Income Tax Expense](index=23&type=section&id=Income%20Tax%20Expense) Income Tax Analysis | Metric | 2021 (in thousands) | 2020 (in thousands) | $ Change (YoY) | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | Income tax expense | $15,972 | $13,453 | $2,519 | 18.7% | | Effective tax rate | 24.1% | 26.7% | N/A | N/A | [Operating Practice Groups](index=24&type=section&id=Operating%20Practice%20Groups) [Financial Services](index=24&type=section&id=Financial%20Services) - Same-unit revenue growth was primarily driven by **traditional accounting and tax-related services** ($7.9 million increase)[79](index=79&type=chunk) - Operating expense as a percentage of revenue **decreased to 69.4%** for Q1 2021 from 73.4% for Q1 2020[79](index=79&type=chunk) Financial Services Performance | Metric | 2021 (in thousands) | 2020 (in thousands) | $ Change (YoY) | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $204,149 | $188,777 | $15,372 | 8.1% | | Same-unit revenue | $195,999 | $187,520 | $8,479 | 4.5% | | Acquired businesses | $8,150 | — | $8,150 | N/A | | Operating expenses | $141,746 | $138,598 | $3,148 | 2.3% | | Gross margin | $62,403 | $50,179 | $12,224 | 24.4% | | Gross margin percent | 30.6% | 26.6% | N/A | N/A | [Benefits and Insurance Services](index=24&type=section&id=Benefits%20and%20Insurance%20Services) - The increase in revenue was primarily driven by acquired businesses, which contributed **$6.4 million in incremental revenue**[81](index=81&type=chunk) - Operating expense as a percentage of revenue **decreased to 76.7%** for Q1 2021 from 81.9% for Q1 2020[81](index=81&type=chunk) Benefits and Insurance Services Performance | Metric | 2021 (in thousands) | 2020 (in thousands) | $ Change (YoY) | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $87,239 | $79,612 | $7,627 | 9.6% | | Same-unit revenue | $80,676 | $79,433 | $1,243 | 1.6% | | Acquired businesses | $6,563 | — | $6,563 | N/A | | Operating expenses | $66,933 | $65,223 | $1,710 | 2.6% | | Gross margin | $20,306 | $14,389 | $5,917 | 41.1% | | Gross margin percent | 23.3% | 18.1% | N/A | N/A | [National Practices](index=25&type=section&id=National%20Practices) - The National Practices group's revenue is primarily driven by a **cost-plus contract with a single client**, accounting for approximately **75% of the group's revenue**[82](index=82&type=chunk) National Practices Performance | Metric | 2021 (in thousands) | 2020 (in thousands) | $ Change (YoY) | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | Same-unit revenue | $9,342 | $9,066 | $276 | 3.0% | | Operating expenses | $8,541 | $8,283 | $258 | 3.1% | | Gross margin | $801 | $783 | $18 | 2.3% | | Gross margin percent | 8.6% | 8.6% | N/A | N/A | [LIQUIDITY](index=25&type=section&id=LIQUIDITY) - Principal sources of liquidity are cash generated from **operating and financing activities**[83](index=83&type=chunk) - The company historically experiences a use of cash in Q1 due to **seasonal accounting and tax services**[84](index=84&type=chunk) - **Days Sales Outstanding (DSO) improved to 91 days** at March 31, 2021, from 94 days at March 31, 2020[86](index=86&type=chunk) Cash Flow Summary | Cash Flow Activity | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(14,827) | $(18,647) | | Net cash provided by investing activities | $229 | $4,355 | | Net cash (used in) provided by financing activities | $(2,960) | $207,772 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(17,558) | $193,480 | [CAPITAL RESOURCES](index=26&type=section&id=CAPITAL%20RESOURCES) - At March 31, 2021, the company had **$162.0 million outstanding** under its 2018 credit facility and approximately **$228.7 million in available funds**[91](index=91&type=chunk) - The weighted average interest rate under the 2018 credit facility was **2.10% in Q1 2021**, down from 2.50% in Q1 2020[91](index=91&type=chunk) - The company was in **compliance with all debt covenants** as of March 31, 2021[94](index=94&type=chunk) - Capital allocation priorities are strategic acquisitions and share repurchases; **1.2 million shares were repurchased for $34.1 million** in Q1 2021[95](index=95&type=chunk) [OFF-BALANCE SHEET ARRANGEMENTS](index=27&type=section&id=OFF-BALANCE%20SHEET%20ARRANGEMENTS) - The company maintains administrative service agreements with independent CPA firms (variable interest entities), which are **not material** to its financial condition[96](index=96&type=chunk) - The company has various indemnification agreements but historically has **not made any material payments** under these agreements[98](index=98&type=chunk) Off-Balance Sheet Commitments | Arrangement | March 31, 2021 (in millions) | December 31, 2020 (in millions) | | :--- | :--- | :--- | | Letters of Credit | $3.0 | $1.7 | | License Bonds | $2.3 | $2.2 | [CRITICAL ACCOUNTING POLICIES](index=27&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) - The financial statements are prepared in accordance with U.S. GAAP, requiring management to make **estimates and judgments**[100](index=100&type=chunk) - **No significant changes** in estimates or judgments have been made since the Annual Report on Form 10-K for the fiscal year ended December 31, 2020[102](index=102&type=chunk) [NEW ACCOUNTING PRONOUNCEMENTS](index=29&type=section&id=NEW%20ACCOUNTING%20PRONOUNCEMENTS) - For a discussion of recently issued accounting pronouncements, refer to **Note 2** of the accompanying condensed consolidated financial statements[103](index=103&type=chunk) [FORWARD-LOOKING STATEMENTS](index=29&type=section&id=FORWARD-LOOKING%20STATEMENTS) - This report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from projections[104](index=104&type=chunk) - Readers are advised to consult **'Item 1A Risk Factors'** in the Annual Report on Form 10-K for the year ended December 31, 2020[105](index=105&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to interest rate risk from its floating-rate debt, which it manages through swaps - The company's floating rate debt exposes it to interest rate risk, with **$77.0 million subject to rate risk** at March 31, 2021[107](index=107&type=chunk) - A **100 basis point change** in market rates would affect interest expense by approximately **$0.8 million annually**[107](index=107&type=chunk) - Interest rate swaps are used to convert floating rate debt to a fixed rate basis; three swaps with notional values totaling **$85.0 million** were outstanding[108](index=108&type=chunk)[109](index=109&type=chunk) - Client funds are invested in available-for-sale debt securities which are adjusted to fair value through other comprehensive income or loss[109](index=109&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2021 - Management, with the participation of the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of March 31, 2021[110](index=110&type=chunk) - It was concluded that CBIZ's disclosure controls were **effective at a reasonable assurance level** as of the end of the reporting period[114](index=114&type=chunk) - **No material changes** to internal control over financial reporting occurred during Q1 2021[115](index=115&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates information on legal proceedings from Note 5 in the financial statements - Information regarding legal proceedings is incorporated by reference from **Note 5, Commitments and Contingencies**, to the financial statements[119](index=119&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) This section advises readers to consider risk factors outlined in the company's Annual Report on Form 10-K - Readers should carefully consider the risk factors discussed under 'Risk Factors' in the company's **Annual Report on Form 10-K** for the year ended December 31, 2020[120](index=120&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the issuance of unregistered equity securities and the company's share repurchase program - During Q1 2021, approximately **38 thousand shares** of common stock were issued as payment for contingent consideration for previous acquisitions[121](index=121&type=chunk) - The Board of Directors authorized the continuation of the Share Repurchase Program to purchase up to **5.0 million shares**[122](index=122&type=chunk) - The 2018 credit facility **prohibits dividend payments**, other than intercompany dividends[124](index=124&type=chunk) Share Repurchases | Period | Total Number of Shares Purchased (in thousands) | Average Price Paid Per Share | | :--- | :--- | :--- | | January 1 – January 31, 2021 | 380 | $26.91 | | February 1 – February 28, 2021 | 386 | $28.42 | | March 1 – March 31, 2021 | 398 | $32.54 | | First quarter purchases (Total) | 1,164 | $29.33 | [Item 3. Defaults Upon Senior Securities](index=33&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the company for the reporting period - This item is marked as **'Not applicable'**[126](index=126&type=chunk) [Item 4. Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company for the reporting period - This item is marked as **'Not applicable'**[126](index=126&type=chunk) [Item 5. Other Information](index=33&type=section&id=Item%205.%20Other%20Information) This item is not applicable to the company for the reporting period - This item is marked as **'Not applicable'**[126](index=126&type=chunk) [Item 6. Exhibits](index=34&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certifications and XBRL documents - Exhibits include certifications from the President and CEO, and Chief Financial Officer, pursuant to the **Sarbanes-Oxley Act of 2002**[128](index=128&type=chunk) - **XBRL-related documents**, such as the Instance Document and various linkbases, are also filed[128](index=128&type=chunk) [Signature](index=35&type=section&id=Signature) The report is officially signed on behalf of CBIZ, Inc by the Chief Financial Officer on April 30, 2021 - The report was signed by **Ware H Grove, Chief Financial Officer** of CBIZ, Inc, on April 30, 2021[132](index=132&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ________________________________________________________________ FORM 10-K ________________________________________________________________ ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number ...