CBIZ CEO Discusses Q3 2010 Results - Earnings Call Transcript

CBIZ CEO Discusses Q3 2010 Results - Earnings Call Transcript
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CBIZ, Inc. (



Q3 2010 Earnings Call

October 28, 2010 11:00 am ET


Steven Gerard - Chairman & CEO

Ware Grove - CFO


Josh Vogel - Sidoti & Company

Jim Macdonald - First Analysis

Robert Kirkpatrick - Cardinal Capital Partners

Ted Hillenmeyer - Northstar Partners



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Welcome to the CBIZ third quarter 2010 results conference call. My name is Monica and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Please note that this conference is being recorded.

I will now turn the call over to Mr. Steven Gerard. Mr. Gerard, you may begin.

Steven Gerard

Thank you, Monica and good morning everyone and thank you for calling into CBIZ’s third quarter 2010 conference call. Before I begin with my comments, I’d like to remind you of a few things.

As with all of our conference calls, this call is intended to answer the questions of our shareholders and analysts. If there are media representatives on the call, you’re welcome to listen in; however, I ask that if you have questions you hold them until after the call and we’ll be happy to address them at that time.

The call is also being webcast and you can access the call over our website. You should have all received a copy of the press release which we issued this morning. If you did not, you can access that on our website or call our corporate office for a copy.

Finally please remember, that during the course of the call, we may make forward-looking statements. These statements represent management’s intentions, hopes, beliefs, expectations, and predictions of the future. Actual results can and sometimes do differ materially from those projected in forward-looking statements.

Additional information concerning the factors which could cause actual results to differ materially from those in forward-looking statements is contained in our SEC filings, Form 10-K and press releases.

Joining me on the call this morning is Jerry Grisko, our President and Chief Operating Officer and Ware Grove, our Chief Financial Officer.

Prior to the opening this morning, we were pleased to release our third quarter results. The third quarter which is typically a slow quarter for us was a very strong quarter in 2010 with relatively flat revenue earnings per share actually from operations were $0.11 versus $0.09 after you discount the $0.02 charge from the early retirement of debt.

We saw a strong operating performance from our financial services and employee services group and good cost control measures implemented in our MMP group. The third quarter also saw a significant number of other activities including the replacement of $130 million of convertible notes to eliminate any refinancing risk for next year when our old notes retire, and in the third quarter we resolve the possible all the issue overhang issue which has been frequently mentioned to us resulting from the shares owned by our founder Mike DeGroote with the purchase of half of these shares and option for the balance.

A combination of the share purchases Mr. DeGroote and the shares purchased in connection with the convert will be highly accretive to our shareholders next year. At this point, I would like to turn it to Ware to go through the details and then I will come back with more comments on what’s going on in the market.

Ware Grove

Thank you, Steve and good morning everyone. We had a lot of significant events that occurred in the third quarter and I want to run through the highlights of these items with you. Let me start by reminding everyone that 2009 results are restated for the impact of discounted operations that occurred in the fourth quarter of 2009.

Now beyond the refinancing and share repurchase transactions that we announced in September, I believe it is most important to note the continued good performance of both our financial services and employee services business groups.

We continue to operate in an uncertain economic environment. But as you look at our results, you will see that thanks to the hard work of the many people within our business units located across the United States both of these groups have increased their pre-tax income contributions and have improved our gross margins for the third quarter and for the nine months ended September 30, 2010.

Total revenue in the third quarter grew from a $175.8 million a year ago to $176.5 million in the third quarter of this year. Same unit revenue for CBIZ in the third quarter declined by 2.2% or by $3.8 million compared with the third quarter a year ago. A majority of this decline could be attributed to the medical management professionals group. We are seeing unit revenue declined by 8.1% or by $3.3 million in the third quarter.

Same year the revenue in our financial services group was essentially flat or declined by four tens of 1% and in our employee services group same unit revenue again was essentially or decline by six tenth of a percent in the third quarter compared with a year ago.

Now for the nine months ended September 2010 same unit revenue for CBIZ declined by 4.4% compared with a year ago. Our MMP group declined by 9.5%, financial services declined by 4.2% and employee services declined by 1.1% compared with the nine months ended a year ago.

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