CBIZ(CBZ)2025-04-25 19:59Revenue and Income - Revenue for Q1 2025 increased by $343.7 million, or 69.5%, to $838.0 million compared to $494.3 million in Q1 2024[77] - Net income for Q1 2025 was $122.8 million, or $1.91 per diluted share, up from $76.9 million, or $1.53 per diluted share in Q1 2024[77] - Revenue from newly acquired operations contributed $333.4 million, or 66.8% of the incremental revenue for Q1 2025[77] - For the three months ended March 31, 2025, the Financial Services practice group revenue increased by 91.5% to $713.7 million from $372.6 million in the same period of 2024, primarily driven by traditional accounting and tax-related services[96] - The Benefits and Insurance Services practice group revenue increased by $4.6 million, or 4.2%, to $113.0 million, primarily due to increases in payroll-related services and employee benefit services[100] - The National Practices group revenue decreased by $1.9 million, or 14.2%, to $11.4 million, primarily due to a divestiture in the same period of 2024[103] Operating Expenses - Total operating expenses for Q1 2025 increased by $233.4 million, or 62.0%, to $609.9 million compared to $376.5 million in Q1 2024[85] - Operating expenses as a percentage of revenue decreased to 72.8% in Q1 2025 from 76.2% in Q1 2024[85] - Personnel costs increased by approximately $194.1 million in Q1 2025, primarily due to acquisitions and divestitures[86] - G&A expenses for Q1 2025 were $28.1 million, or 3.3% of revenue, compared to $18.7 million, or 3.8% of revenue in Q1 2024[87] - Operating expenses for the Financial Services practice group rose by $244.9 million, or 92.2%, to $510.5 million, with personnel costs increasing by $194.7 million largely due to acquisitions[98] - Operating expenses for the Benefits and Insurance Services practice group increased by $1.7 million, or 2.1%, to $85.4 million, with personnel costs rising by $0.9 million[101] - Total corporate general and administrative expenses increased by $9.4 million, or 50.0%, during the three months ended March 31, 2025, largely due to higher legal and professional services costs associated with a transaction[108] Income Tax and Other Income - The income tax expense for the three months ended March 31, 2025 was $50.1 million, an increase of 84.8% compared to $27.1 million in the same period of 2024, driven by higher pre-tax income[93] - Other income (expense), net for the three months ended March 31, 2025 included a net loss of $2.6 million related to the deferred compensation plan, compared to a net gain of $9.6 million in the same period of 2024[91] - Total other income (expense), net for the three months ended March 31, 2025 was $(27.6) million, a decrease of $32.4 million compared to a gain of $4.8 million in the same period of 2024[107] - Total other (expense) income, net decreased by $32.4 million in Q1 2025 compared to Q1 2024, primarily due to a net loss of $2.6 million associated with the deferred compensation plan[109] Cash Flow and Debt - Cash used in operating activities was $88.3 million in Q1 2025, consisting of a working capital use of $247.7 million, offset by net income of $122.8 million[114] - Cash provided by financing activities was $55.4 million in Q1 2025, primarily from $127.5 million in net proceeds from the credit facility[117] - The company has $1,548.4 million outstanding debt under the 2024 Credit Facilities as of March 31, 2025[79] - Outstanding debt under the 2024 Credit Facilities was $1,548.4 million as of March 31, 2025, with available funds of approximately $384.0 million[119] - The weighted average interest rate under the 2024 Credit Facilities increased to 6.57% in Q1 2025 from 5.23% in Q1 2024[119] - Interest expense for the three months ended March 31, 2025 was $25.2 million, a significant increase from $4.5 million in the same period of 2024, driven by a higher average debt balance of $1,443.4 million[89] - The outstanding balance under the 2024 Credit Facilities was $1,548.4 million as of March 31, 2025, with $1,348.4 million subject to interest rate risk[136] - A 100 basis point change in market rates would result in an annual interest expense fluctuation of approximately $13.5 million[136] Share Repurchase and Acquisitions - The company repurchased 0.1 million shares of common stock for approximately $7.7 million during Q1 2025[80] - The company authorized the purchase of up to 5.0 million shares under its share repurchase program, which expires on March 31, 2026[81] - No acquisitions were completed in Q1 2025, but the company repurchased 0.1 million shares for tax withholding purposes at a cost of approximately $7.7 million[121] Compliance and Risks - The company remains in compliance with financial covenants under the 2024 Credit Facilities as of March 31, 2025[120] - The company is subject to risks related to processing customer transactions, which could materially affect its business and financial condition[132] - The company may incur transaction, integration, and restructuring costs associated with its acquisition program, impacting financial performance[132] - Changes in the U.S. healthcare environment may adversely affect revenue and margins in the healthcare benefit business[132] - The company faces competition in the business services industry, which could negatively impact its financial condition and results of operations[132] - Cybersecurity risks, including potential breaches of computer systems, could materially affect the company's business[132] - The company’s increased leverage following the transaction may adversely impact its business and sensitivity to revenue fluctuations[132] Cash Management - Cash used in investing activities was $5.0 million in Q1 2025, primarily for capital expenditures of $5.2 million[115] - The company segregates funds collected from clients for payroll operations, investing them in short-term investments classified as available-for-sale securities[139] - Cash requirements for 2025 include repayment of outstanding debt, strategic acquisitions, and seasonal working capital needs, with expected sufficiency from operational cash flows[122] Receivables Management - Days sales outstanding (DSO) improved to 96 days in Q1 2025 from 101 days in Q1 2024, indicating better receivables collection efficiency[112]