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01/11 16:20
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed picture. Strong revenue and EBITDA growth are offset by challenges in SPAC-related work and integration costs. Positive elements include a share repurchase program and improved DSOs, but concerns about capital markets and unclear management responses temper enthusiasm. The market cap suggests moderate sensitivity, leading to a neutral prediction with potential for slight volatility.
Revenue $383 million, up 70% from $494 million year-over-year, primarily due to the acquisition of Marcum.
Adjusted EBITDA $238 million, doubled from $119 million year-over-year, reflecting strong margin and scale attributes of the business model and the accretive impact of the acquisition.
Pretax Income $173 million, up $69 million or 66% year-over-year, driven by the acquisition.
Adjusted Diluted EPS $2.29, up approximately 40% from $1.63 per share year-over-year, impacted by higher interest and tax expenses.
Interest Expense $21 million higher than last year due to increased borrowing and borrowing rates from the acquisition funding.
Effective Tax Rate Increased approximately 300 basis points, reflecting $5 million in higher tax expense due to the addition of legacy Marcum revenue from jurisdictions with higher rates.
Financial Services Revenue $714 million, up $341 million or approximately 92% year-over-year.
Financial Services Adjusted EBITDA $230 million, doubled year-over-year, reflecting an adjusted EBITDA margin of 32%.
Benefits and Insurance Revenue $113 million, up $5 million or approximately 4% year-over-year.
Benefits and Insurance Adjusted EBITDA $30 million, up $3 million or 10% year-over-year, with an adjusted EBITDA margin of 27%, up nearly 150 basis points.
Total Debt Approximately $1.5 billion at the end of the quarter.
Unused Capacity Approximately $385 million on a $2 billion facility.
Days Sales Outstanding (DSOs) 96 days, five days lower than the prior year, driven by improved collections.
Depreciation and Amortization Nearly $25 million for the first quarter, estimated at approximately $100 million for the full year.
Capital Expenditures Estimated between $20 million and $25 million for 2025, with $5 million incurred in the first quarter.
Synergies from Acquisition Expected approximately $25 million in synergies, with the majority to be delivered in year two and beyond.
Revenue Guidance: Widened revenue guidance for 2025 to a range of $2.8 billion to $2.95 billion due to economic uncertainties.
Integration Progress: Integration efforts following the acquisition of Marcum are on schedule, with strong collaboration among teams.
Operational Improvements: Focus on integrating technology systems to streamline processes and enhance data visibility.
Cash Flow Management: Strong cash flows and high client retention rates support operational resilience.
M&A Strategy: Increased interest in CBIZ as an acquirer of choice, evaluating opportunities to expand geographic presence and service lines.
Economic Environment: The company is operating in a rapidly evolving, uncertain economic and geopolitical environment, which has impacted revenue results and client industries.
Client Losses: Anticipated loss of clients due to conflicts that prohibit continued network relations related to a transaction.
Revenue Guidance: Widening of revenue guidance to a range of $2.8 billion to $2.95 billion due to uncertainty in the economic climate and limited visibility into forecasting demand for discretionary services.
Interest Expense: Higher interest expense of $21 million compared to last year due to increased borrowing and borrowing rates from the acquisition funding.
Tax Rate Increase: Effective tax rate increased approximately 300 basis points, primarily due to the addition of legacy Marcum revenue from jurisdictions with higher rates.
Discretionary Services: Softness in nonrecurring service lines is expected to continue, representing approximately 23% of revenue.
SPAC Business Decline: Decline in SPAC-related work, which was a significant part of Marcum's capital markets practice, is expected to continue affecting revenue.
Integration Challenges: Integration of technology systems and teams from the Marcum acquisition is critical and poses challenges in operational improvements and process standardization.
Integration Progress: Integration efforts following the acquisition of Marcum are on schedule, with strong collaboration among teams.
Technology Integration: Focus on integrating technology systems to streamline processes and enhance data visibility.
M&A Strategy: Increased interest in CBIZ as an acquirer of choice, evaluating opportunities to build geographic presence and strengthen service lines.
Client Retention: High retention rates and strong engagement among employees.
Revenue Guidance: Full year 2025 revenue expected to be within a range of $2.8 billion to $2.95 billion.
Adjusted EBITDA Guidance: Adjusted EBITDA and adjusted EPS guidance remains unchanged.
Capital Expenditures: Estimated capital expenditures for 2025 are between $20 million and $25 million.
Debt and Leverage: Total debt at the end of Q1 was approximately $1.5 billion, with an expected leverage of 2x to 2.5x by the end of 2026.
Synergies: Expected approximately $25 million in synergies from the Marcum acquisition, with the majority to be delivered in year two and beyond.
Share Repurchase Program: CBIZ is authorized to repurchase up to 5 million shares. Approximately 4.4 million shares will have been issued to former Marcum Partners and will become eligible for resale effective May 1, 2025. After May 1, there will be an additional approximately 300,000 shares delivered monthly through 2027, all subject to the company's right of first refusal.
The earnings call reveals strong financial performance driven by acquisitions, with significant revenue and EBITDA growth. Despite some uncertainties in guidance and integration costs, the company maintains positive client retention and notable client wins. The Q&A indicates optimism about future growth, synergies, and operational efficiencies. The market cap suggests moderate stock reaction, leading to a positive prediction.
The earnings call highlights strong financial performance, particularly in Financial Services, and optimistic guidance on Marcum synergies. However, concerns about flat advisory business performance, discretionary spending trends, and integration costs temper the positivity. The market cap suggests moderate sensitivity, leading to a neutral prediction of stock movement.
The earnings call presents a mixed picture. Strong revenue and EBITDA growth are offset by challenges in SPAC-related work and integration costs. Positive elements include a share repurchase program and improved DSOs, but concerns about capital markets and unclear management responses temper enthusiasm. The market cap suggests moderate sensitivity, leading to a neutral prediction with potential for slight volatility.
The earnings call highlights a successful acquisition of Marcum, leading to significant revenue growth and strong EPS performance. Despite some integration and financial risks, optimistic guidance for 2025 and potential for cross-selling opportunities provide a positive outlook. The planned share repurchase program further supports stock price appreciation. Given the company's market cap, the stock is likely to experience a positive movement of 2% to 8% over the next two weeks.
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