CBIZ, Inc. Q4 FY2024 earnings call

• 2024 was an exceptional year for CBIZ with growth across major service lines despite uncertainty. Completed the transformational acquisition of Marcum in November. - Financial Services division of legacy CBIZ had strong growth in various service lines. Benefits and Insurance division had strong growth mostly, except for Property & Casualty insurance group impact. - In 2024, adjusted earnings per share was $2.67, a 10.8% increase from prior year, within expected range. - For 2025, focus on integration activities with organic revenue growth expected. - Integration of Marcum: Established Integration Management Office, organized Accounting & Tax business into 6 geographic regions and named leaders, identified industry leaders, high retention rate, working on cultural alignment through communication, and focusing on growth through new services and client engagement.

For legacy CBIZ's Financial Services division, it had an impressive year with growth from all major service lines like Accounting & Tax, advisory, and Government Health Care Consulting. Growth was driven by pricing, yield, increased realization in advisory and new projects in Government Health Care Consulting. The Accounting & Tax business saw growth across major markets, advisory had strong growth due to private equity - focused services and forensic group billable hours, and Government Health Care Consulting benefited from more new project work. The Benefits and Insurance division had strong growth in nearly all service lines, but Property & Casualty insurance group was impacted by the departure of some producers in the Southeast. With the addition of Marcum for the last 2 months of 2024, total revenue in the fourth quarter was up 40.5%, with $108.9 million or 33.2% increase from Marcum, and excluding Marcum, fourth - quarter same - unit revenue was up 6.4%. For the full year, total revenue was up 14%, with Marcum contributing $108.9 million, and excluding Marcum, full - year same - unit revenue was up 7.1%. Financial Services' same - unit revenue was up 7.2% in Q4 and 4.8% for the year, while Benefits and Insurance's same - unit revenue was up 3.8% in Q4 and 4.0% for the year.

• 2025 total revenue expected in range of $2.9 billion to $2.95 billion, primarily organic growth. - Adjusted earnings per share expected in range of $3.60 to $3.65 per share. - Adjusted EBITDA for 2025 expected at approximately $455 million. - Interest expense for 2025 projected at approximately $100 million, assuming flat rate environment. - Capital spending expected in range of $20 million to $25 million. - Fully diluted weighted average share count expected at approximately 64.5 million to 65 million shares for the full year.

• Seasonal nature of Marcum's Accounting & Tax business causing disproportionate impact in short stub period. - Integration challenges related to aligning systems, processes, and cultures. - Market uncertainties such as interest rates, inflation, and political outcomes that could impact client discretionary spending.

Q: Christopher Moore asked if the $3.60 to $3.65 adjusted EPS includes an add - back of the tax - adjusted intangible amortization.

A: Ware H. Grove said it does not, and the amortization is normal intangible amortization added back, and the cash flow tax asset is a separate issue.

Q: Christopher Moore inquired about the ability to get leverage down in 2.1 to 2.3x in the next 24 months.

A: Ware H. Grove said cash flow - generating capability will accelerate, but initially in 2025, there will be integration expenses and retention payments that are cash flow items.

Q: Christopher Moore asked about the benefits of scale from Marcum, specifically leveraging technology.

A: Jerry Grisko said scale allows more in technology, innovation, brand elevation, and talent attraction, and the combination of CBIZ's advisory practice and Marcum's industry groups is powerful.

Q: Andrew Nicholas asked about the organic growth expectation for Marcum in 2025.

A: Jerry Grisko said Marcum's core accounting practice should track very close to CBIZ's core accounting practice and expect strong performance in 2025.

Q: Andrew Nicholas asked about areas or practices excited about in the combined organization and Government Health Care Consulting.

A: Jerry Grisko said there is healthy optimism for organic growth in 2025, and for Government Health Care Consulting, there is no expected pause and could be more reliance if federal workforce is reduced.

Q: Marc Riddick asked about client retention trends with Marcum and cross - selling.

A: Jerry Grisko said retention is high, clients are excited about expanded services, and there are cross - selling opportunities.

Q: Marc Riddick asked about pricing environment and guidance numbers.

A: Jerry Grisko said pricing is supply and demand - driven, expecting healthy mid - single - digit organic growth with half - half or 1/3 - 2/3 mix of volume and pricing.

Q: Marc Riddick asked about client industry verticals activity.

A: Jerry Grisko said there are 10 industry or specialty practices with revenues over $100 million, bringing thought leadership and subject - matter expertise, and exciting for growth opportunities