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]

Financial Data and Key Metrics Changes - Total revenue for Q4 2024 increased by 40.5%, with $108.9 million or a 33.2% increase attributed to the newly acquired Marcum operations [26] - For the full year 2024, total revenue was up 14%, with $108.9 million or a 6.8% increase attributed to Marcum [27] - Adjusted earnings per share for 2024 was $2.67, a 10.8% increase over the previous year's $2.41 [28] Business Line Data and Key Metrics Changes - Financial Services division saw growth across all major service lines, including Accounting & Tax, advisory, and Government Health Care Consulting [12] - Benefits and Insurance division also experienced strong growth, particularly in Employee Benefits and Retirement & Investment Services, with a noted outlier in Property & Casualty insurance due to producer departures [14] Market Data and Key Metrics Changes - Same-unit revenue for Financial Services was up 7.2% in Q4, while Benefits and Insurance saw a 3.8% increase [26] - For the full year, same-unit revenue for Financial Services was up 4.8%, and Benefits and Insurance was up 4.0% [27] Company Strategy and Development Direction - The acquisition of Marcum solidified the company's position as a leading provider of professional services to middle-market businesses, enhancing service offerings and market position [10] - The company plans to focus on integration activities in 2025, with expectations for organic revenue growth supplemented by strategic acquisitions [31][42] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the operating environment in 2025, citing improved clarity on interest rates and economic conditions post-election [85] - The company anticipates a healthy level of organic growth driven by increased demand for discretionary project-oriented services [87] Other Important Information - The company completed two other strategic acquisitions and two tuck-in acquisitions in addition to the Marcum transaction [16] - Total debt at year-end 2024 was $1.42 billion, with approximately $550 million of unused capacity within a new $2 billion financing facility [36] Q&A Session Summary Question: Does the $3.60 to $3.65 adjusted EPS include an add-back of the tax-adjusted intangible amortization? - The amortization is added back, but it does not include the cash flow tax asset [62] Question: What is the expectation for Marcum's organic growth in 2025? - The expectation is for strong performance in 2025, mirroring the core accounting practice growth [81] Question: What areas or practices are most exciting for growth in 2025? - The company expects stronger organic growth in 2025, particularly in discretionary project-oriented services [85] Question: What is the pricing environment like for the combined CBIZ going forward? - The demand is expected to remain high, allowing for continued pricing ability [99] Question: Are there any particular industry verticals showing more activity? - The combined organization now has 10 industry groups with revenues over $100 million, enhancing growth opportunities [103]

Company Overview - CBIZ is a leading professional services advisor to middle-market businesses and organizations nationwide[9] - The company has over 10,000 employees and over 160 offices in 22 major markets, serving over 135,000 clients[13] - CBIZ estimates that approximately 77% of its services are recurring[26] Financial Performance and Guidance - CBIZ's 2024 revenue was approximately $2.8 billion[13] - The company's total revenue growth for financial services in 2024 was 17.4%[57] - CBIZ projects 2025 revenue to be between approximately $2.90 billion and $2.95 billion[57] - The company's adjusted diluted EPS for 2024 was $2.67, and the guidance for 2025 is $3.60 to $3.65[57] Strategic Initiatives - The acquisition of Marcum is expected to be accretive in 2025, with an estimated contribution to Adjusted EPS of approximately 10%[42] - CBIZ anticipates over $25 million in cost synergies from the Marcum integration[44] - The company's long-term revenue growth goal is 8%-10%[47]

Revenue Performance - For Q4 2024, CBIZ reported revenue of $460.3 million, a 40.5% increase year-over-year, with 33.2% attributed to the acquisition of Marcum LLP[2] - For the full year 2024, total revenue reached $1,813.5 million, up $222.3 million or 14.0% from $1,591.2 million in 2023, with a same-unit revenue increase of 4.8%[3] - Revenue for the three months ended December 31, 2024, was $460,279 thousand, a 40.4% increase from $327,547 thousand in 2023[27] - For the twelve months ended December 31, 2024, total revenue reached $1,813,472 thousand, up from $1,591,194 thousand in 2023, marking a 13.9% year-over-year growth[32] - Financial Services revenue for the three months ended December 31, 2024, was $358,381 thousand, a 57.0% increase from $228,298 thousand in 2023[38] Earnings and Profitability - Adjusted EPS for 2024 was $2.67, reflecting a 10.8% increase compared to the previous year, while GAAP EPS was $0.78[4] - Adjusted diluted EPS for the twelve months ended December 31, 2024, was $2.67, compared to $2.41 in 2023, indicating an increase in adjusted earnings per share[32] - The company reported a diluted loss per share of $1.53 for the three months ended December 31, 2024, compared to a loss of $0.26 per share in 2023[27] - Net income for the twelve months ended December 31, 2024, was $41,038,000, a decrease of 66% compared to $120,968,000 in 2023[42] - The company provided guidance for full year 2025 GAAP net income between $127.9 million and $131.1 million, with diluted EPS expected to be between $1.97 and $2.02[50] Expenses and Losses - Operating expenses for the same period rose to $522,179 thousand, representing 113.4% of revenue, compared to 104.1% in 2023[27] - The operating loss for the three months ended December 31, 2024, was $106,665 thousand, compared to a loss of $26,735 thousand in 2023, highlighting a worsening operational performance[27] - Interest expense for the twelve months ended December 31, 2024, increased to $34,379 thousand from $20,131 thousand in 2023, reflecting higher borrowing costs[32] Debt and Financial Position - As of December 31, 2024, CBIZ had $1,420.9 million in outstanding debt with $556.0 million of unused borrowing capacity[5] - The company reported a total long-term debt of $1,333,755,000 in 2024, compared to $310,826,000 in 2023, indicating a substantial increase of 328%[44] - The company reported a debt to equity ratio of 78.6% in 2024, up from 39.3% in 2023, indicating increased leverage[44] Cash Flow and Assets - Net cash provided by operating activities decreased to $123,692,000 in 2024 from $153,507,000 in 2023, reflecting a decline of approximately 19%[42] - Cash and cash equivalents at the end of the period increased to $187,170,000 in 2024 from $157,148,000 in 2023, marking an increase of 19%[42] - Total assets increased significantly to $4,470,883,000 in 2024, up from $2,043,592,000 in 2023, representing an increase of 118%[44] Future Guidance and Projections - The company expects total revenue for 2025 to be in the range of $2.90 billion to $2.95 billion, with adjusted EBITDA projected between $450 million and $456 million[11] - CBIZ aims to leverage the Marcum acquisition to enhance its service offerings and expand its market presence in 2025[6] - The company has a weighted average fully diluted share count projected to be between 64.5 million and 65.0 million shares for 2025[11] - Adjusted EBITDA for 2025 is projected to be between $450.4 million and $456.2 million[50] Operational Efficiency - Same-unit revenue growth for Q4 2024 was 6.4%, while for the full year, it was 4.8% excluding the impact of the Marcum acquisition[6] - Days sales outstanding (DSO) improved to 73 days in 2024 from 78 days in 2023, indicating better efficiency in collecting receivables[44]

Fourth-Quarter Highlights - CBIZ reported fourth-quarter revenue of $460.3 million, a 40.5% increase compared to the same period in 2023, with 33.2% attributed to the acquisition of Marcum LLP [2] - Same-unit revenue increased by 6.4% in the fourth quarter [6] Full-Year Highlights - For the full year ended December 31, 2024, CBIZ recorded revenue of $1,813.5 million, a 14.0% increase from $1,591.2 million in 2023, with 6.8% attributed to the Marcum acquisition [3] - Adjusted earnings per share for the full year was $2.67, reflecting a 10.8% increase compared to 2023 [4] 2025 Outlook - The company anticipates total revenue for 2025 to be in the range of $2.90 billion to $2.95 billion, with GAAP EPS projected between $1.97 and $2.02 per diluted share [10] - Adjusted EPS is expected to be between $3.60 and $3.65 per diluted share, with adjusted EBITDA projected between $450 million and $456 million [10][34] Acquisition Impact - The acquisition of Marcum LLP, completed on November 1, 2024, is the largest in the company's history and has significantly impacted revenue growth and operational scale [2][6] - The company entered into a new $2.0 billion credit facility in connection with the acquisition, with outstanding indebtedness of $1,420.9 million as of December 31, 2024 [5] Financial Performance - The company reported a net loss of $90.7 million for the fourth quarter, with a diluted loss per share of $1.53 [19] - For the full year, net income was $41.0 million, translating to a diluted income per share of $0.78 [21] Segment Performance - Financial Services revenue for the fourth quarter was $358.4 million, up from $228.3 million in 2023, while Benefits and Insurance Services revenue was $91.2 million, compared to $86.4 million in the prior year [23] - The gross margin for Financial Services showed a loss of $66.2 million in the fourth quarter, influenced by integration costs related to the Marcum acquisition [23] Cash Flow and Financial Position - Net cash provided by operating activities for the year was $123.7 million, down from $153.5 million in 2023 [25] - Total assets increased to $4.47 billion as of December 31, 2024, compared to $2.04 billion in 2023, reflecting the impact of the Marcum acquisition [27] Debt and Equity - The company's debt-to-equity ratio increased to 78.6% as of December 31, 2024, compared to 39.3% in the previous year, indicating a higher leverage following the acquisition [27] - The total stockholders' equity rose to $1.78 billion from $791.6 million in 2023 [27]