CBIZ, Inc. (NYSE:CBZ) Q4 2020 Earnings Conference Call February 18, 2021 11:00 AM ET Company Participants Lori Novickis - Director of Corporate Relations Jerome Grisko - President, CEO Ware Grove - Senior VP & CFO Conference Call Participants Chris Moore - CJS Securities Andrew Nicholas - William Blair Marc Riddick - Sidoti & Company Operator Good day, and welcome to the CBIZ Full Year 2020 Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn t ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Condensed Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Financial%20Statements%20(Unaudited)) This section presents CBIZ, Inc.'s unaudited condensed consolidated financial statements, highlighting year-over-year increases in total assets, net income, and earnings per share [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet as of September 30, 2020, shows total assets increased to **$1.425 billion** from **$1.401 billion**, driven by goodwill and intangible assets, with stockholders' equity rising to **$718.0 million** Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Total Assets** | **$1,425,116** | **$1,400,774** | | Total Current Assets | $425,891 | $456,020 | | Goodwill and other intangible assets, net | $695,562 | $654,671 | | **Total Liabilities** | **$707,112** | **$741,536** | | Total Current Liabilities | $298,056 | $365,926 | | Total Long-term Debt | $109,103 | $104,333 | | **Total Stockholders' Equity** | **$718,004** | **$659,238** | [Consolidated Statements of Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) For the nine months ended September 30, 2020, revenue increased by **1.0%** to **$752.8 million**, with net income growing **9.1%** to **$78.4 million** and diluted EPS rising to **$1.41** Income Statement Highlights (in thousands, except per share data) | Metric | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | Revenue | $752,787 | $745,286 | | Gross Margin | $139,184 | $122,496 | | Operating Income | $106,196 | $88,580 | | Net Income | $78,393 | $71,867 | | Diluted EPS (Continuing Operations) | $1.41 | $1.29 | [Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Total stockholders' equity increased to **$718.0 million** by September 30, 2020, primarily due to **$78.4 million** in net income, partially offset by **$34.8 million** in share repurchases - Key changes in stockholders' equity for the nine months ended September 30, 2020 include: Net income of **$78.4 million**, share repurchases of **$34.8 million**, and stock-based compensation of **$6.8 million**[14](index=14&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly increased to **$81.8 million** for the nine months ended September 30, 2020, while **$33.8 million** was used for acquisitions and **$34.1 million** for share repurchases Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $81,796 | $49,414 | | Net cash used in investing activities | ($9,491) | ($24,691) | | Net cash used in financing activities | ($94,058) | ($56,473) | | Net decrease in cash | ($21,753) | ($31,750) | [Notes to the Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, new standards, acquisitions, and legal contingencies, highlighting the adoption of the CECL model, five acquisitions, and significant ongoing legal proceedings - Effective January 1, 2020, the company adopted Topic 326 (CECL model), which did not have a material impact on the consolidated financial statements[24](index=24&type=chunk) - The company recorded bad debt expense of **$2.2 million** due to the COVID-19 pandemic during the nine months ended September 30, 2020[27](index=27&type=chunk) - During the first nine months of 2020, the company completed five acquisitions for an aggregate consideration of approximately **$55.3 million**, consisting of cash, common stock, and contingent consideration[49](index=49&type=chunk)[51](index=51&type=chunk) - The company faces several significant legal proceedings, including claims by UPMC for damages between **$124.0 million** and **$266.0 million**, and by Zotec for damages up to **$177.0 million**[32](index=32&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial resilience in 2020, with nine-month revenue growing **1.0%** to **$752.8 million** driven by acquisitions, while maintaining strong liquidity and strategic capital deployment - The recurring and essential nature of the majority of business services provided stability to financial results, with no material adverse impact from COVID-19 through Q3 2020[74](index=74&type=chunk) Nine-Month Revenue Performance by Segment (in thousands) | Segment | 2020 Revenue | 2019 Revenue | % Change | | :--- | :--- | :--- | :--- | | Financial Services | $498,359 | $493,311 | 1.0% | | Benefits and Insurance Services | $227,433 | $225,342 | 0.9% | | National Practices | $26,995 | $26,633 | 1.4% | | **Total CBIZ** | **$752,787** | **$745,286** | **1.0%** | - For the nine months ended September 30, 2020, the company repurchased **1.4 million** shares of common stock for approximately **$34.8 million**[85](index=85&type=chunk) - Days Sales Outstanding (DSO) was **87 days** at September 30, 2020, an improvement from **94 days** at the same time in 2019[136](index=136&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate exposure on its floating-rate debt, managed through **$95.0 million** in interest rate swaps, with a **100 basis point** rate change impacting annual interest expense by **$0.2 million** - The company's primary market risk is interest rate risk from its **$110.0 million** floating-rate debt outstanding under the 2018 credit facility[159](index=159&type=chunk) - A **100 basis point** change in market interest rates would increase or decrease annual interest expense by approximately **$0.2 million**[159](index=159&type=chunk) - The company utilizes interest rate swaps to mitigate risk. As of September 30, 2020, four swaps were outstanding with a total notional value of **$95.0 million**[160](index=160&type=chunk)[161](index=161&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls were effective as of September 30, 2020, following the implementation of a new cloud-based accounting system, with no material COVID-19 impact on internal controls - Based on an evaluation, the CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period[166](index=166&type=chunk) - A new cloud-based accounting and financial reporting solution was implemented on July 1, 2020, with ongoing testing of related internal controls[167](index=167&type=chunk) - The company has not experienced any material impact to its internal controls over financial reporting due to the COVID-19 pandemic and the shift to remote work[167](index=167&type=chunk) [PART II. OTHER INFORMATION](index=37&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) This section details significant ongoing legal proceedings, including substantial claims from UPMC seeking up to **$266 million** and Zotec seeking up to **$177 million**, which the company intends to vigorously defend - Information regarding legal proceedings is incorporated by reference from Note 5, Commitments and Contingencies[170](index=170&type=chunk) - The company is a defendant in several lawsuits, including a case brought by UPMC seeking damages of **$124.0 million** to **$266.0 million**, and a case by Zotec seeking damages up to **$177.0 million**[32](index=32&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) The company identifies public health crises, particularly the COVID-19 pandemic, as a significant risk factor with potential adverse impacts on the global economy, client businesses, service demand, and financial results - The widespread outbreak of a communicable illness like COVID-19 is identified as a significant risk factor that could adversely affect the company's business, results of operations, and financial condition[172](index=172&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company issued **81,000** unregistered shares for acquisitions and repurchased **165,000** shares in Q3 2020, with **4.765 million** shares remaining available under its repurchase program - During the nine months ended September 30, 2020, approximately **81,000** shares of common stock were issued as payment for contingent consideration for previous acquisitions in private transactions[173](index=173&type=chunk) Issuer Purchases of Equity Securities (Q3 2020) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | July 2020 | — | — | | August 2020 | — | — | | September 2020 | 165,000 | $22.69 | | **Total Q3** | **165,000** | **$22.69** | - As of September 30, 2020, a maximum of **4.765 million** shares may still be purchased under the company's share repurchase plan[177](index=177&type=chunk) [Item 3. Defaults Upon Senior Securities](index=38&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the company for the reporting period - Not applicable[178](index=178&type=chunk) [Item 4. Mine Safety Disclosures](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company for the reporting period - Not applicable[179](index=179&type=chunk) [Item 5. Other Information](index=38&type=section&id=Item%205.%20Other%20Information) This item is not applicable to the company for the reporting period - Not applicable[179](index=179&type=chunk) [Item 6. Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including a loan agreement amendment, CEO and CFO certifications, and interactive data files in XBRL format - Filed exhibits include the Second Amendment to the Loan Agreement with The Huntington National Bank[181](index=181&type=chunk) - CEO and CFO certifications required under Sarbanes-Oxley Sections 302 and 906 are included as exhibits[181](index=181&type=chunk)[182](index=182&type=chunk) - Interactive Data Files (XBRL documents) are also filed as exhibits[183](index=183&type=chunk)

Financial Data and Key Metrics Changes - For Q3 2020, revenue was $238.4 million, a slight decrease of $1.4 million compared to the same period in 2019. However, income from continuing operations improved by 12.5% and EBITDA increased by 8.3% year-over-year [15] - Year-to-date revenue reached $752.8 million, an increase of $7.5 million over the prior year, with income from continuing operations improving by 8.6% and adjusted EBITDA increasing by 7.6% [15][16] Business Line Data and Key Metrics Changes - Within the Financial Services segment, core accounting and tax services continued to perform well, reflecting steady demand. Total revenue in this segment for Q3 was up 1.1%, with same unit revenue flat year-over-year [38] - The Benefits and Insurance segment saw a total revenue decline of 4% in Q3, with same unit revenue down by 6%. However, core recurring services remained stable, with solid retention rates [40][42] Market Data and Key Metrics Changes - The government healthcare consulting business experienced reasonable growth, although the rate of growth slowed due to COVID-related issues. The demand for these services remains strong, but the timing of certain work is uncertain [19][20] - The payroll business faced some softness due to early declines in the number of people on payroll, but the number of pays improved in May and has remained stable since then [22] Company Strategy and Development Direction - The company is focusing on strategic acquisitions as a key part of its recovery and long-term growth strategy, having completed five acquisitions so far this year [24][31] - The company aims to leverage its diverse client base and the essential nature of its services to maintain performance and position itself for growth as the economy improves [30][63] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the resilience of their client base, particularly those with annual revenues exceeding $20 million, which have historically proven to be more resilient in challenging environments [63] - The company is prepared to assist clients with potential new economic stimulus opportunities and has seen a positive response to its outreach efforts [11][84] Other Important Information - The company has resumed share repurchase activity, repurchasing approximately 1.5 million shares at a cost of about $37 million to date [54][55] - The effective tax rate for the nine months was 25.7%, with expectations for the full year to remain within a range of 24% to 25% [57] Q&A Session Summary Question: Pricing power differences between financial services and benefits and insurance - Management noted that pricing is different between the two divisions, with financial services being more fee-driven and not experiencing significant fee pressure in the current environment [72][74] Question: Impact of government healthcare demand and timing - Management confirmed that while demand remains strong, COVID-related challenges have impacted the timing of work, particularly requiring on-site presence [75][76] Question: Visibility for fiscal 2021 guidance - Management indicated it is too early to provide guidance for fiscal 2021 but expressed hope for clearer visibility if there are no further COVID shutdowns [79] Question: Customer response to potential stimulus and decision-making delays - Management highlighted that clients are optimistic about future stimulus and the company is ready to assist them as needed [81][84] Question: Long-term market share opportunities - Management expressed confidence in gaining market share due to the unique value proposition and comprehensive services offered, which are well-received in the current environment [87][90] Question: Complexity of current tax code changes - Management anticipates changes in tax laws regardless of election outcomes, which could increase complexity and provide opportunities for the company to assist clients [95][96]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 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 1-32961 CBIZ, Inc. (Exact name of registrant as specified in its charter) Delaware 22-2769024 (State or other jurisdiction of i ...

CBIZ, Inc. (NYSE:CBZ) Q2 2020 Earnings Conference Call July 30, 2020 11:00 AM ET Company Participants Lori Novickis - Director of Corporate Relations Jerry Grisko - President & Chief Executive Officer Ware Grove - Chief Financial Officer Conference Call Participants Andrew Nicholas - William Blair Chris Moore - CJS Securities Marc Riddick - Sidoti & Company Operator Welcome to the CBIZ Second Quarter 2020 Results Conference Call. All participants will be in a listen-only mode. [OperatorInstructions] After t ...

| --- | --- | --- | --- | --- | |----------------------------------|-------|-------|-------|-------| | | | | | | | | | | | | | SECOND-QUARTER & FIRST-HALF 2020 | | | | | | Investor Presentation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 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 forward-looking statements are subject to certain risks ...

CBIZ, Inc. (NYSE:CBZ) Q1 2020 Earnings Conference Call May 6, 2020 11:00 AM ET Company Participants Lori Novickis - Director of Corporate Relations Jerry Grisko - President & Chief Executive Officer Ware Grove - Chief Financial Officer Conference Call Participants Andrew Nicholas - William Blair Marc Riddick - Sidoti & Company Operator Good day and welcome to the CBIZ First Quarter 2020 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 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 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 1-32961 CBIZ, Inc. (Exact name of registrant as specified in its charter) Delaware 22-2769024 (State or other jurisdiction of ...

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, 2019 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 1-32961 CBIZ, INC. (Exact name of registrant as specified in its charter) Delaware 22-2769024 (State or other jurisdiction of incorporation or organ ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 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, 2019 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 1-32961 CBIZ, Inc. (Exact name of registrant as specified in its charter) Delaware 22-2769024 (State or other jurisdiction ...