Financial Data and Key Metrics Changes - Consolidated first quarter revenue increased 70% from $494 million to $838 million, primarily due to the acquisition of Marcum [23] - Adjusted EBITDA doubled from $119 million to $238 million, reflecting strong margin and scale attributes [24] - Pretax income was $173 million, up $69 million or 66% [25] - Adjusted diluted EPS increased approximately 40% from $1.63 to $2.29 per share [25] - Interest expense increased by $21 million due to higher borrowing and rates from acquisition funding [26] Business Line Data and Key Metrics Changes - Financial Services segment revenue was $714 million, up $341 million or approximately 92% [27] - Financial Services adjusted EBITDA doubled to $230 million, maintaining an adjusted EBITDA margin of 32% [27] - Benefits and Insurance segment revenue was $113 million, up $5 million or approximately 4%, with adjusted EBITDA of $30 million, up $3 million or 10% [28] Market Data and Key Metrics Changes - Nonrecurring services now represent approximately 23% of total revenue, with expected softness due to economic conditions [32] - The government healthcare consulting business posted strong revenue growth in Q1 and is expected to continue performing well [14][60] Company Strategy and Development Direction - The company is focused on integrating technology systems to enhance operational improvements and streamline processes [37] - There is an increased interest in CBIZ as an acquirer of choice following the successful completion of the Marcum transaction [39] - The company aims to maintain its adjusted EBITDA and adjusted EPS guidance while widening revenue guidance due to economic uncertainties [31][32] Management's Comments on Operating Environment and Future Outlook - The management acknowledges the challenging economic and geopolitical environment impacting client industries, particularly capital markets and advisory services [12][14] - Despite revenue pressures, the company is optimistic about its core recurring business performance and integration progress [108][112] - The management emphasizes the importance of maintaining profitability through variable cost adjustments and operational efficiencies [78][82] Other Important Information - The company expects approximately $60 million in payments related to prior acquisitions in 2025, with $30 million already paid in Q1 [33] - Total debt at the end of the quarter was approximately $1.5 billion, with a leverage ratio of about 4x [30] - Approximately 4.4 million shares will be eligible for resale effective May 1, 2025, with a share repurchase program in place [34] Q&A Session Summary Question: What conditions would the bottom end of the new revenue range assume? - The bottom end of the new range reflects ongoing headwinds from the SEC audit practice and transactional pressures in the private equity business [68][70] Question: What operational measures are being taken to offset revenue pressures? - The company is leveraging variable compensation structures and reducing headcount to manage costs effectively [78][82] Question: Can you provide an update on capital allocation priorities? - The company is focused on reducing leverage while remaining opportunistic for strategic acquisitions and share repurchases [87][89] Question: How are client conflicts being managed post-acquisition? - The company anticipated some client conflicts due to the merger, particularly in healthcare, but these impacts are within expected ranges [94][96] Question: What is the outlook for pricing trends in the current environment? - The company has seen positive pricing trends but acknowledges potential downward pressure if the market remains challenging [103][104]

Financial Data and Key Metrics Changes - The overall performance for the first quarter showed a revenue increase of 70% from $494 million to $838 million, primarily due to the acquisition of Markham [13] - Adjusted EBITDA doubled from $119 million to $238 million, reflecting strong margin and scale attributes [14] - Adjusted diluted EPS increased approximately 40% from $1.63 to $2.29 per share [15] Business Line Data and Key Metrics Changes - The Financial Services segment's revenue was $714 million, up $341 million or approximately 92%, with adjusted EBITDA doubling to $230 million [16] - The Benefits and Insurance segment delivered revenue of $113 million, up $5 million or approximately 4%, with adjusted EBITDA increasing by 10% to $30 million [17] Market Data and Key Metrics Changes - Non-recurring services now represent approximately 23% of total revenue, with anticipated softness due to economic conditions [19] - The government healthcare consulting business showed strong revenue growth and a robust pipeline of new projects [8] Company Strategy and Development Direction - The company is focused on integrating technology systems post-acquisition to enhance operational improvements and streamline processes [23] - There is an ongoing evaluation of M&A opportunities to build geographic presence and strengthen service lines [25] Management's Comments on Operating Environment and Future Outlook - The management acknowledged the challenging economic environment but expressed confidence in the business model's resilience [6] - The company maintained its adjusted EBITDA and adjusted EPS guidance, while widening revenue guidance to $2.8 billion to $2.95 billion due to uncertainties [19] Other Important Information - The company expects approximately $60 million in payments related to prior acquisitions in 2025, with $30 million already paid in Q1 [19] - Total debt at the end of the quarter was approximately $1.5 billion, with a leverage ratio of about four times [18] Q&A Session Summary Question: Concerns about capital markets and revenue guidance - Management indicated that capital markets are a significant concern, with reliance on deal flow affecting revenue [37][40] Question: Outlook for government healthcare consulting - Management expects continued strong performance in government healthcare consulting, with a positive outlook for the remainder of the year [42] Question: Breakdown of integration costs - Management provided insights into integration costs, estimating $75 million for 2025, with significant IT-related costs extending into 2026 [44] Question: Conditions for revised revenue guidance - Management clarified that the revised revenue guidance reflects a pragmatic assessment of current economic conditions and historical performance during similar downturns [49][51] Question: Operational adjustments to maintain earnings guidance - Management highlighted various levers to protect earnings, including adjustments in compensation and discretionary spending [58][60] Question: Capital allocation priorities - Management emphasized a focus on reducing leverage while remaining opportunistic for strategic acquisitions and share repurchases [64][65] Question: Client conflicts and their impact on guidance - Management acknowledged client conflicts as expected during the integration process, with most impacts now behind them [70][72]

Financial Performance - CBIZ reported first-quarter 2025 revenue of $838.0 million, a 69.5% increase from $494.3 million in the same period of 2024[6]. - Net income for the first quarter of 2025 was $122.8 million, or $1.91 per diluted share, compared to $76.9 million, or $1.53 per diluted share, in the prior year, reflecting a 59.7% increase in net income[6][9]. - Adjusted EBITDA for the first quarter of 2025 was $237.6 million, up 100.0% from $118.8 million in the same quarter of 2024[7]. - Adjusted net income for the first quarter of 2025 was $147.2 million, or $2.29 per diluted share, a 79.7% increase compared to $81.9 million, or $1.63 per diluted share, in the same period last year[7]. - CBIZ's operating income for the first quarter of 2025 was $200.0 million, representing 23.9% of revenue, compared to $99.1 million, or 20.0% of revenue, in the same quarter of 2024[22]. - For the three months ended March 31, 2025, total revenue increased to $838,014 thousand, up 69.5% from $494,297 thousand in the same period of 2024[28]. - Net income for the three months ended March 31, 2025, was $122,773 thousand, a 59.8% increase from $76,884 thousand in 2024[30]. - Adjusted EBITDA for the three months ended March 31, 2025, was $237,620 thousand, compared to $118,830 thousand in 2024, reflecting a significant increase[36]. Future Projections - The company expects full-year 2025 revenue to be between $2.8 billion and $2.95 billion, indicating continued growth despite economic uncertainties[8]. - The company anticipates adjusted EBITDA for 2025 to be in the range of $450 million to $456 million[14]. - Diluted earnings per share for 2025 are expected to be between $1.97 and $2.02, with adjusted diluted earnings per share projected between $3.60 and $3.65[14]. - Full Year 2025 GAAP Net Income is projected to be between $127.9 million and $131.1 million, with diluted EPS ranging from $1.97 to $2.02[39]. - Adjusted Net Income for 2025 is expected to be between $234.5 million and $237.7 million, with adjusted diluted EPS between $3.60 and $3.65[39]. - Adjusted EBITDA guidance for 2025 is projected to be between $450.4 million and $456.2 million[39]. Integration and Costs - The integration of Marcum is on schedule, contributing to strong employee and client retention rates[5][9]. - The company incurred integration costs related to acquisitions amounting to $15,692 thousand for the three months ended March 31, 2025[36]. - Integration costs related to acquisitions are expected to total $75.0 million for 2025[39]. - The company is focusing on integration costs related to the Marcum acquisition, which includes consulting, technology, and personnel expenses[40]. - Accelerated depreciation associated with technology assets from the acquisition of Marcum is included in the reported expenses[38]. - Incremental non-recurring lease expenses are incurred due to real estate optimization efforts[38]. Financial Position - Cash and cash equivalents at the end of the period were $149,306 thousand, compared to $135,914 thousand at the end of March 2024[30]. - The company reported a debt to equity ratio of 79.8% as of March 31, 2025, up from 78.6% at the end of 2024[32]. - Days sales outstanding (DSO) increased to 96 days as of March 31, 2025, compared to 73 days in the previous year[32]. - Total assets increased to $4,585,498 thousand as of March 31, 2025, compared to $4,470,883 thousand at the end of 2024[32]. Tax and Expenses - The effective tax rate is projected to be approximately 29% for 2025[14]. - Depreciation expense for 2025 is estimated at $22.1 million[39]. - Amortization of acquired intangible assets is projected to be $75.1 million for 2025[39]. - Interest expense for 2025 is anticipated to be $99.3 million[39].

Industry Overview - The consulting industry has experienced exponential growth since the 2008 financial crisis, characterized by steady revenues, profit, and cash-flow growth due to economic strength and increased service activities [1] - The industry is currently ranked in the top 7% of the Zacks Industry Rank, indicating strong performance expectations over the next three to six months [2] - The consulting services sector has been one of the least affected by the pandemic, as organizations continue to seek extensive advice on employee protection and consumer engagement [4] Company Recommendations - Five consulting stocks are recommended for portfolio strengthening, including Huron Consulting Group Inc. (HURN), CBIZ Inc. (CBZ), Stantec Inc. (STN), Information Services Group Inc. (III), and CRA International Inc. (CRAI) [3] Huron Consulting Group Inc. (HURN) - HURN operates in three segments: Healthcare, Education, and Commercial, and holds a Zacks Rank 1 (Strong Buy) [6] - Expected revenue and earnings growth rates for HURN are 8.9% and 10.5%, respectively, with a 3.5% improvement in the Zacks Consensus Estimate for current-year earnings [8] - The average short-term price target for HURN indicates a potential upside of 31.2% from the last closing price of $137.21, with targets ranging from $165 to $180 [8] CBIZ Inc. (CBZ) - CBZ provides a wide range of professional business services, including financial and employee management services, and also holds a Zacks Rank 1 [10] - Expected revenue and earnings growth rates for CBZ are 61.4% and 36%, respectively, with a 23.1% improvement in the Zacks Consensus Estimate for current-year earnings [11] - The average short-term price target for CBZ suggests a maximum upside of 23% from the last closing price of $77.24, with targets ranging from $86 to $95 [12] Stantec Inc. (STN) - STN offers professional consulting services in various fields, including planning, engineering, and environmental sciences, and holds a Zacks Rank 1 [13] - Expected revenue and earnings growth rates for STN are 7.3% and 14.2%, respectively, with a slight improvement in the Zacks Consensus Estimate for current-year earnings [15] - The average short-term price target for STN indicates a maximum upside of 19.6% from the last closing price of $86.60, with targets ranging from $94.50 to $103.60 [15] Information Services Group Inc. (III) - III operates as an AI-centered technology research and advisory company, providing digital transformation services and holds a Zacks Rank 2 [16] - Expected revenue and earnings growth rates for III are -2.6% and 35%, respectively, with a 3.9% improvement in the Zacks Consensus Estimate for current-year earnings [19] - The average short-term price target for III suggests a maximum upside of 90.7% from the last closing price of $3.67, with targets ranging from $3.75 to $7 [20] CRA International Inc. (CRAI) - CRAI provides economic, financial, and management consulting services globally and holds a Zacks Rank 2 [21] - Expected revenue and earnings growth rates for CRAI are 4.4% and 2%, respectively, with a 1.3% improvement in the Zacks Consensus Estimate for current-year earnings [24] - The average short-term price target for CRAI indicates a maximum upside of 50.5% from the last closing price of $164.25, with targets ranging from $224 to $247 [24]

Core Viewpoint - CBIZ reported quarterly earnings of $2.29 per share, exceeding the Zacks Consensus Estimate of $2.13 per share, and showing a significant increase from $1.54 per share a year ago, indicating strong performance despite missing revenue expectations [1][2]. Financial Performance - The company achieved revenues of $838.01 million for the quarter ended March 2025, which was 2.78% below the Zacks Consensus Estimate, but up from $494.3 million year-over-year [2]. - Over the last four quarters, CBIZ has surpassed consensus EPS estimates three times and topped revenue estimates twice [2]. Stock Performance - CBIZ shares have declined approximately 5.6% since the beginning of the year, while the S&P 500 has seen a decline of 8.6% [3]. - The stock currently holds a Zacks Rank 1 (Strong Buy), indicating expectations for outperformance in the near future [6]. Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.97 on revenues of $728 million, and for the current fiscal year, it is $3.63 on revenues of $2.93 billion [7]. - The trend of estimate revisions for CBIZ has been favorable leading up to the earnings release, which may influence future stock movements [6][5]. Industry Context - The Consulting Services industry, to which CBIZ belongs, is currently ranked in the top 9% of over 250 Zacks industries, suggesting a positive outlook for stocks within this sector [8].

Core Insights - CBIZ, Inc. reported strong first-quarter results for 2025, with significant increases in revenue and net income, demonstrating resilience in varying business climates [2][3][5]. Financial Performance - Revenue for Q1 2025 was $838.0 million, a 69.5% increase from $494.3 million in Q1 2024 [3][19]. - Net income rose to $122.8 million, or $1.91 per diluted share, compared to $76.9 million, or $1.53 per diluted share, in the same period last year, marking a 59.7% increase in net income [3][19]. - Adjusted EBITDA for Q1 2025 was $237.6 million, doubling from $118.8 million in Q1 2024, reflecting a 100% increase [4][19]. - Adjusted net income was $147.2 million, or $2.29 per diluted share, up 79.7% from $81.9 million, or $1.63 per diluted share, in Q1 2024 [4][19]. Segment Performance - The Financial Services segment generated $713.7 million in revenue, significantly up from $372.6 million in Q1 2024 [19]. - Benefits and Insurance Services revenue increased slightly to $113.0 million from $108.4 million year-over-year [19]. - National Practices revenue decreased to $11.4 million from $13.3 million in the previous year [19]. Integration and Operational Efficiency - The integration of Marcum is progressing on schedule, contributing to strong employee and client retention rates [2][5]. - Operating expenses as a percentage of revenue decreased from 76.2% in Q1 2024 to 72.8% in Q1 2025, indicating improved operational efficiency [17]. 2025 Outlook - The company anticipates full-year 2025 revenue to be in the range of $2.8 billion to $2.95 billion, reflecting some uncertainty in non-recurring service lines due to the current economic environment [5][10]. - The effective tax rate is expected to be approximately 29% [10]. - Adjusted EBITDA for the full year is projected to be between $450 million and $456 million [10].

Core Viewpoint - CBIZ, Inc. will announce its financial results for the first quarter of 2025 on April 24, 2025, before market opening [1] Group 1: Financial Results Announcement - The financial results for the first quarter ended March 31, 2025, will be disclosed before markets open on April 24, 2025 [1] - A conference call to discuss these results will be held on the same day at 11 a.m. (ET) [2] - The conference call will be available via live webcast on the CBIZ investor relations page [2] Group 2: Participation Details - Investors can register to receive the dial-in number and a unique personal identification number for the conference call [3] - Registration is open at any time, including up to and after the call start time [3] Group 3: Company Overview - CBIZ, Inc. is a leading professional services advisor to middle-market businesses across the United States [4] - The company specializes in accounting, tax, advisory, benefits, insurance, and technology services [4] - CBIZ employs over 10,000 team members in more than 160 locations across 22 major markets [4]

Core Insights - Investors prioritize companies with consistent profitability, measured effectively by net profit margin, which reflects operational efficiency and management quality [1][2] Group 1: Net Profit Margin - Net profit margin is calculated as Net Profit/Sales * 100, indicating a company's ability to convert sales into profits [2] - A strong net profit margin suggests effective cost control and operational strength, essential for attracting investors and rewarding stakeholders [2] - Companies with higher net profit margins compared to peers gain a competitive advantage [2] Group 2: Industry Variability - Net profit margin varies across industries, complicating direct comparisons, particularly between traditional and technology sectors [3] - Differences in accounting practices, such as treatment of non-cash expenses, further complicate comparisons [4] - Companies with high debt levels may report lower net profits due to interest expenses, limiting the metric's effectiveness [4] Group 3: Investment Strategy - A healthy net profit margin and solid earnings per share (EPS) growth are critical elements for a successful business model [5] - Screening parameters include a net margin of at least 0%, positive EPS growth, and favorable broker ratings [6] Group 4: Company Highlights - Sterling Infrastructure (STRL) operates in E-Infrastructure and has a Zacks Rank of 1 with a VGM Score of A; its 2025 earnings estimate was revised upward by 14% to $7.35 per share [7][8] - Kingstone Companies (KINS) provides property and casualty insurance, also holding a Zacks Rank of 1 and a VGM Score of A; its 2025 earnings estimate increased to $1.80 from $1.55 per share [9] - Meritage Hospitality (MHGU) focuses on restaurant operations, maintaining a Zacks Rank of 1 and a VGM Score of A; its 2025 earnings estimate rose to $1.36 from $1.12 per share [10][11] - CBIZ (CBZ) offers insurance and financial services, with a Zacks Rank of 1 and a VGM Score of B; its 2025 earnings estimate increased by 23% to $3.63 per share [11][12]

Group 1 - The core analysis of CBIZ, Inc. (NYSE: CBZ) indicates a Strong Buy rating based on historical growth and the strategic acquisition of Marcum LLP [1] - The acquisition of Marcum LLP is highlighted as a significant factor contributing to the positive outlook for CBIZ [1] Group 2 - Robert F. Abbott has been managing investments since 1995 and has experience with options trading since 2010, indicating a long-term investment strategy [1]

Revenue and Financial Performance - CBIZ's total revenue for the year ended December 31, 2024, was $1,813.5 million, representing a 13.9% increase from $1,591.2 million in 2023[38] - Revenue for fiscal year 2024 was $1,813.5 million, an increase of $222.3 million, or 14.0%, from $1,591.2 million in 2023[153] - Same-unit revenue increased by $76.9 million, or 4.8%, while acquisitions contributed $145.4 million, or 8.0% to total revenue[153] - Total revenue from Financial Services was $1,362.5 million, representing 75.1% of total revenue, up from $1,160.7 million, or 72.9% in 2023[161] - Total revenue for the Financial Services practice group grew by 17.4% to $1,362.5 million in 2024, with same-unit revenue increasing by 4.8%[175] - Benefits and Insurance Services practice group revenue increased by 4.8% to $401.0 million in 2024, with same-unit revenue up by 4.0%[177] Operating Expenses and Income - Operating expenses increased by $263.0 million to $1,631.0 million in 2024, with operating expenses as a percentage of revenue rising to 89.9%[164] - Operating income for 2024 was $73.7 million, with a gross margin of $182.5 million, reflecting a decrease from the previous year[163] - Personnel costs drove the increase in operating expenses, with a $194.5 million rise attributed to higher personnel costs in 2024[165] - G&A expenses increased by approximately $50.8 million, or 87.6%, in 2024, reaching $108.8 million, which is 6.0% of revenue compared to 3.6% in 2023[166] - Total operating expenses increased by $5.1 million, or 13.1%, in 2024 compared to 2023, primarily due to higher personnel costs[182] Acquisitions and Growth Strategy - The company completed five business acquisitions in 2024, including the acquisition of Marcum LLP, which is the largest transaction in its history[25][40] - The company acquired five businesses during 2024, including Marcum, as part of its growth strategy[97] - The acquisition of Marcum is expected to significantly increase the attest services received and the revenues generated under the existing Administrative Service Agreement with CBIZ CPAs[84] - Following the Attest Purchase, the number of SEC-reporting attest clients of CBIZ CPAs increased from very few or none to well over 100[87] Challenges and Risks - The company may face challenges in managing conflicts of interest and independence restrictions due to the significant increase in SEC-reporting attest clients[87] - The performance and benefits from the acquisition of Marcum may be adversely affected if the anticipated benefits are not realized or if unforeseen liabilities arise[81] - The company has identified certain material weaknesses in Marcum's internal control over financial reporting prior to the acquisition[95] - Changes in U.S. healthcare legislation may adversely affect revenue and margins in the company's healthcare benefit businesses[100] - Higher unemployment rates in the U.S. could lead to a reduction in employer-sponsored healthcare coverage, impacting commissions received[102] - Cybersecurity risks remain a concern, with past breaches highlighting vulnerabilities in the company's systems[105] Human Capital and Employee Engagement - CBIZ has over 10,000 team members nationwide, emphasizing the importance of human capital for delivering multi-disciplinary and technology-enabled solutions[55] - The company received a record 106 workplace awards in 2024, highlighting its commitment to attracting and retaining top talent[26] - The company focuses on a recruitment strategy that includes targeted campus recruiting and a robust internship program to build a strong talent pipeline[56] - CBIZ's centralized recruitment team utilizes best practices and various tools to source top talent, ensuring a consistent and fair hiring process[58] - The company prioritizes continuous learning and development, offering comprehensive training programs to prepare team members for future leadership roles[60] - CBIZ's commitment to human rights and diversity is reflected in its equal opportunity employment practices and the CBIZ Human Rights Policy[59] - The company has a strong focus on employee engagement, utilizing feedback from annual surveys to enhance talent initiatives and recognition programs[61] Financial Position and Capital Structure - As of December 31, 2024, the company has $1.4 billion in principal amount outstanding under its 2024 Credit Facilities, which consist of a $1.4 billion term loan and a $600 million revolving credit facility[117] - The company has approximately 53.3 million shares of common stock outstanding as of January 31, 2025, with 250 million shares authorized[124] - The stock consideration from the recent transaction is expected to constitute approximately 22% of the company's outstanding shares, potentially diluting current stockholders' ownership[126] - The company issued approximately 159,000 shares of common stock during the year ended December 31, 2024, as payment for acquisitions[144] - The company repurchased 1 share at an average price of $77.90 during December 2024, with a remaining capacity of 4,996 shares under the publicly announced repurchase plan[146] - The company's debt to EBITDA ratio has increased significantly following a recent transaction, raising concerns about its ability to service debt and pursue growth opportunities[121] Tax and Interest Expenses - Interest expense increased to $34.4 million in 2024 from $20.1 million in 2023, driven by a higher average debt balance and interest rate[169] - Income tax expense decreased to $16.8 million in 2024, with an effective tax rate of 29.0%, up from 27.3% in 2023[173] - The company's effective tax rate may vary significantly due to share-based compensation linked to stock price fluctuations[113] Cash Flow and Investment Activities - Net cash provided by operating activities was $123.7 million in 2024, down from $153.5 million in 2023, with net income of $41.0 million[189][190] - Net cash used in investing activities in 2024 was $1,129.3 million, primarily for business acquisitions, compared to $79.4 million in 2023[185][192] - Net cash provided by financing activities in 2024 was $1,035.6 million, mainly from the 2024 Credit Facilities, compared to a net cash used of $77.1 million in 2023[185][195] Market and Competitive Landscape - The company competes in a highly fragmented professional services industry, leveraging strong client relationships and data-driven expertise as competitive advantages[53] - The competitive landscape in the business services industry is fragmented, with significant competition from larger firms[112] - Rapid technological changes could impact the company's competitive position and client relationships[114]