Financial Data and Key Metrics Changes - For Q2 2025, consolidated revenue was $684 million, and first half revenue was $1.5 billion, reflecting a 6366% increase, largely driven by the Marcom acquisition [15] - Adjusted EBITDA for Q2 increased by 128% to $66 million, and more than doubled to $356 million for the first half [16] - Adjusted EBITDA margin was 17% for the quarter and 23% year to date, an increase of nearly 500 basis points compared to last year [17] - Adjusted diluted earnings per share for Q2 increased by 64% to $0.95, and for the first half, it increased by 47% to $3.26 [19] Business Line Data and Key Metrics Changes - Financial Services segment revenue for Q2 was $570 million, up approximately 84%, with adjusted EBITDA more than doubling to $111 million, a margin of 20% [20] - Benefits and Insurance segment revenue was $102 million in Q2, up approximately 5%, with adjusted EBITDA of $20 million, a 21% increase [21] Market Data and Key Metrics Changes - Year-to-date organic revenue for core services in Benefits and Insurance and Accounting and Tax Services grew by low single digits, while the National Practice segment grew by 13% [6] - Year-to-date rate increases averaged about 4%, which is 200 to 300 basis points below expectations, creating a headwind of about $75 million for the full year [9] Company Strategy and Development Direction - The Marcom acquisition is viewed as a significant strategic decision, enhancing the company's position in key U.S. markets and expanding its client base [12] - The company aims to maintain a disciplined approach to capital allocation, focusing on deleveraging to 2.5 times or below by 2026 [22][23] Management's Comments on Operating Environment and Future Outlook - The current economic climate has impacted market-sensitive areas, with clients prioritizing cost controls and waiting for more stable conditions before investing in discretionary services [6][8] - Management expects continued steady demand for core recurring essential businesses, despite ongoing headwinds in nonrecurring services [10] Other Important Information - The company ended the quarter with approximately $1.6 billion in net debt, representing 3.7 times leverage, and approximately $400 million of available liquidity [23] - The company has repurchased approximately 1 million shares at a value of approximately $71 million during the second quarter [24] Q&A Session Summary Question: Advisory business performance and guidance - Management indicated that the guidance for the rest of the year suggests the second half will look much like the first half, with clients remaining cautious in a challenging environment [31][32] Question: Pricing pushback and structural limits - Management believes the pricing pushback is market-driven and not indicative of reaching structural limits, with optimism for future pricing improvements as market conditions stabilize [38][39] Question: Integration costs and synergies - Integration costs are expected to remain around $75 million for the year, with ongoing efforts to realize synergies exceeding initial expectations [50][45] Question: Free cash flow and leverage targets - The company anticipates a similar cash flow profile moving forward, with a notable use of working capital in the first quarter and aims to achieve 2.5x leverage by 2026 [54][55] Question: Client feedback on the Markham transaction - Management reported positive feedback regarding team quality and collaboration, with adjustments made to improve client experiences during the integration process [57][66]

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]