CBIZ (CBZ) Q2 2024 earnings summary

Executive summary

• Announced agreement to acquire Marcum for $2.3B, expected to close in Q4 2024, creating a combined entity with $2.8B in revenue, over 10,000 professionals, and 135,000+ clients, positioning as the 7th largest U.S. accounting services provider.

• Q2 and first-half 2024 revenue grew 5.4% and 7.2% year-over-year, with same-unit revenue up 2.8% in Q2 and 4.4% in the first half; acquisitions contributed 2.6% and 2.7% respectively.

• Q2 net income was $19.8M, down 26.3% year-over-year, with GAAP EPS falling 26.4% due to $6.7M in Marcum transaction-related expenses and a rare P&C team exit impacting EPS by $0.03.

• The business model emphasizes high recurring revenue (~75%), strong client retention (~90%), and a broad geographic footprint.

• Business climate remained stable, but some project-based and discretionary services experienced delays due to economic uncertainty and the election year.

Financial highlights

• Q2 2024 revenue was $420.0M, gross margin $53.6M (13.3%), and operating income $31.6M (7.5%).

• Q2 same-unit revenue grew 2.8%, with acquisitions contributing 2.6%; first-half same-unit revenue up 4.4%, acquisitions added 2.7%.

• Financial Services Q2 revenue up 6.3% (same-unit up 3.0%); Benefits & Insurance Q2 revenue up 1.6% (same-unit up 0.7%).

• Q2 and first-half included $6.7M in Marcum transaction costs, excluded from adjusted EPS.

• Net cash provided by operating activities for H1 2024 was $24.4M, down from $29.7M in H1 2023.

Outlook and guidance

• Full-year 2024 revenue expected to grow 7%-9%; GAAP EPS expected to increase 6%-8% over 2023 ($2.39); adjusted EPS to rise 10%-12% over 2023 ($2.41), with a $0.06 per share reduction due to the P&C incident.

• Effective tax rate projected at ~28% for 2024; diluted share count expected: 50M-50.5M.

• Marcum transaction expected to close in Q4 2024; 2025 guidance to be provided post-close.

• Guidance excludes the impact of the Marcum acquisition, with updates expected after closing.

• Second-half 2024 expected to show stronger year-over-year growth as headwinds subside.