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Item 2. Management’s Discussion and Analysis

2022-05-02 compared with 2021-10-29 · 129 added, 272 removed, 158 unchanged (72% of the section changed)

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Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to “we”, “us”, “our”, "CBIZ" or the "Company" shall mean CBIZ, Inc., a Delaware corporation, and its operating subsidiaries.

The following discussion is intended to assist in the understanding of our financial position at September 30, 2021 and December 31, 2020, results of operations for the three and nine months ended September 30, 2021 and 2020, and cash flows for the nine months ended September 30, 2021 and 2020, and should be read in conjunction with the condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2020.

The following discussion is intended to assist in the understanding of our financial position at March 31, 2022 and December 31, 2021, results of operations for the three months ended March 31, 2022 and 2021, and cash flows for the three months ended March 31, 2022 and 2021, and should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2021.

This discussion and analysis contains forward-looking statements and should also be read in conjunction with the disclosures and information contained in “Forward-Looking Statements” included elsewhere in this Quarterly Report on Form 10-Q and in “Item 1A.

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Financial Services, Benefits and Insurance Services, and National Practices.

Refer to Note 12, Segment Disclosures, to the accompanying condensed consolidated financial statements for a general description of services provided by each practice group.

Refer to Note 12, Segment Disclosures, to the accompanying unaudited condensed consolidated financial statements for a general description of services provided by each practice group.

Refer to the Annual Report on Form 10-K for the year ended December 31, 2021 for further discussion of our business and strategies, as well as the external relationships and regulatory factors that currently impact our operations.

EXECUTIVE SUMMARY

Revenue for the three months ended September 30, 2021 increased by $44.3 million, or 18.6%, to $282.7 million from $238.4 million for the same period in 2020.

Same-unit revenue increased by approximately $19.8 million million, or 8.3% as compared to the same period in 2020.

Revenue from newly acquired operations, net of divestitures, contributed $24.6 million, or 10.3%, of incremental revenue for the three months ended September 30, 2021 as compared to the same period in 2020.

Revenue for the nine months ended September 30, 2021 increased by $109.3 million, or 14.5%, to $862.1 million from $752.8 million for the same period in 2020.

Revenue for the three months ended March 31, 2022 increased by $91.0 million, or 30.3%, to $391.7 million from $300.7 million for the same period in 2021.

Same-unit revenue increased by approximately $28.8 million, or 9.6% as compared to the same period in 2021.

Revenue from newly acquired operations, net of divestitures, contributed $54.8 million, or 7.3%, of incremental revenue for the nine months ended September 30, 2021 as compared to the same period in 2020.

A detailed discussion of revenue by practice group is included under "Operating Practice Groups".

Income from continuing operations was $21.7 million, or $0.41 per diluted share, in the third quarter of 2021, compared to $20.1 million, or $0.36 per diluted share, in the third quarter of 2020.

For the nine months ended September 30, 2021, income from continuing operations was $80.5 million, or $1.50 per diluted share, compared to $78.4 million, or $1.41 per diluted share, for the same period in 2020.

Revenue from newly acquired operations, net of divestitures, contributed $62.2 million, or 20.7%, of incremental revenue for the three months ended March 31, 2022 as compared to the same period in 2021.

Income from continuing operations was $58.1 million, or $1.10 per diluted share, in the first quarter of 2022, compared to $50.2 million, or $0.92 per diluted share, in the first quarter of 2021.

Refer to “Results of Operations – Continuing Operations” for a detailed discussion of the components of income from continuing operations.

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We believe that repurchasing shares of our common stock can be a prudent use of our financial resources, and that investing in our stock is an attractive use of capital and an efficient means to provide value to our stockholders.

We have completed five acquisitions for $66.1 million in cash and $6.9 million in our common stock.

We also repurchased 2.8 million shares of our common stock at a total cost of approximately $87.9 million in the nine months ended September 30, 2021.

Refer to Note 11, Business Combinations, to the accompanying condensed consolidated financial statements for further discussion on acquisitions.

During the first quarter of 2022, we completed one acquisition for $72.5 million in cash.

We also repurchased 0.3 million shares of our common stock on open market as well as for tax withholding purposes at a total cost of approximately $12.4 million in the three months ended March 31, 2022.

Refer to Note 11, Business Combinations, to the accompanying unaudited condensed consolidated financial statements for further discussion on acquisitions.

During the first quarter of 2022, the CBIZ Board of Directors authorized the purchase of up to 5.0 million shares of our common stock under our Share Repurchase Program (the “Share Repurchase Program”), which may be suspended or discontinued at any time and expires on April 1, 2023.

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RESULTS OF OPERATIONS – CONTINUING OPERATIONS

The following tables summarize total revenue for the three and nine months ended September 30, 2021 and 2020 (in thousands except percentages).

Three Months Ended September 30,

Total 2020 % of

Financial Services $ 187,232 66.2 % $ 155,499 65.2 % $ 31,733 20.4 %

Benefits and Insurance Services 85,797 30.3 % 73,881 31.0 % 11,916 16.1 %

National Practices 9,690 3.5 % 9,009 3.8 % 681 7.6 %

Total CBIZ $ 282,719 100.0 % $ 238,389 100.0 % $ 44,330 18.6 %

Nine Months Ended September 30,

The following tables summarize total revenue for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

Total 2021 % of

(Amounts in thousands, except percentages)

Financial Services $ 288,746 73.7 % $ 204,149 67.9 % $ 84,597 41.4 %

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The non-qualified deferred compensation plan has no impact on “Income from continuing operations before income tax expense” or diluted earnings per share from continuing operations.

Income and expenses related to the deferred compensation plan for the three and nine months end September 30, 2021 and 2020 are as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

(In thousands)

Income and expenses related to the deferred compensation plan for the three months end March 31, 2022 and 2021 are as follows:

Three Months Ended March 31,

(Amounts in thousands)

Operating (income) expenses $ (5,667) $ 4,616

Corporate general and administrative expenses (86) 672 1,260 343

Other income (expense), net (298) 6,036 12,425 3,139

Excluding the impact of the above-mentioned Income and expenses related to the deferred compensation plan, the operating results for the three and nine months end September 30, 2021 and 2020 are as follows (in thousands except percentages):

Three Months Ended September 30,

As Reported Deferred Compensation Plan Adjusted % of Revenue As Reported Deferred Compensation Plan Adjusted % of Revenue

Gross margin $ 44,391 $ (212) $ 44,179 15.6 % $ 33,629 $ 5,364 $ 38,993 16.4 %

Operating (loss) income 31,356 (298) 31,058 11.0 % 22,290 6,036 28,326 11.9 %

Other income (expense), net (1,133) 298 (835) (0.3) % 5,914 (6,036) (122) (0.1) %

Income from continuing operations before income tax expense 29,207 — 29,207 10.3 % 27,156 — 27,156 11.4 %

Nine Months Ended September 30,

Corporate general and administrative (income) expenses (811) 496

Other (expense) income, net (6,478) 5,112

Excluding the impact of the above-mentioned income and expenses related to the deferred compensation plan, the operating results for the three months ended March 31, 2022 and 2021 are as follows:

Three Months Ended March 31,

(Amounts in thousands, except percentages)

As Reported Deferred Compensation Plan Adjusted % of Revenue As Reported Deferred Compensation Plan Adjusted % of Revenue

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Operating income 85,114 (6,478) 78,636 20.1 % 62,276 5,112 67,388 22.4 %

Other income (expense), net 12,029 (12,425) (396) — % 3,450 (3,139) 311 — %

Other (expense) income, net (6,403) 6,478 75 — % 4,789 (5,112) (323) (0.1) %

Income from continuing operations before income tax expense 77,452 — 77,452 19.8 % 66,188 — 66,188 22.0 %

Operating Expenses

Three Months Ended September 30,

(In thousands, except percentages)

Total Operating expenses $ 238,328 $ 204,760 $ 33,568 16.4 %

Operating expenses % of revenue 84.3 % 85.9 %

Operating expenses excluding deferred compensation $ 238,540 $ 199,396 $ 39,144 19.6 %

Operating expenses excluding deferred

compensation % of revenue 84.4 % 83.6 %

Nine Months Ended September 30,

(In thousands, except percentages)

Three Months Ended March 31,

(Amounts in thousands, except percentages)

Operating expenses by segment:

Financial Services $ 209,800 $ 141,746 $ 68,054 48.0 %

Benefits and Insurance Services 72,657 66,933 5,724 8.6 %

National Practices 9,576 8,541 1,035 12.1 %

Corporate and Other (1,734) 6,751 (8,485) (125.7) %

Total Operating expenses $ 290,299 $ 223,971 $ 66,328 29.6 %

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compensation % of revenue 75.6 % 72.9 %

Three months ended September 30, 2021 compared to September 30, 2020.

Total operating expenses for the three months ended September 30, 2021 increased by $33.6 million, or 16.4%, to $238.3 million as compared to $204.8 million in the same period of 2020.

The non-qualified deferred compensation plan decreased operating expenses by $0.2 million for the three months ended September 30, 2021, and increased operating expense by $5.4 million during the same period in 2020.

Excluding the non-qualified deferred compensation expenses, which was recorded in "Corporate and Other" for segment reporting purposes, operating expenses would have been $238.5 million and $199.4 million, or 84.4% and 83.6% of revenue, for the three months ended September 30, 2021 and 2020, respectively.

Total operating expenses for the three months ended March 31, 2022 increased by $66.3 million, or 29.6%, to $290.3 million as compared to $224.0 million in the same period of 2021.

The non-qualified deferred compensation plan decreased operating expenses by $5.7 million for the three months ended March 31, 2022, and increased operating expense by $4.6 million during the same period in 2021.

Excluding the non-qualified deferred compensation expenses, which was recorded in "Corporate and Other" for segment reporting purposes, operating expenses would have been $296.0 million and $219.4 million, or 75.6% and 72.9% of revenue, for the three months ended March 31, 2022 and 2021, respectively.

In addition, operating expense for the three months ended March 31, 2022 included approximately $4.4 million, or 1.1% of revenue, non-recurring integration and retention costs related to the Marks Paneth acquisition.

The majority of our operating expenses relate to personnel costs, which includes (i) salaries and benefits, (ii) commissions paid to producers, (iii) incentive compensation, and (iv) stock-based compensation.

Excluding the impact of deferred compensation, which was recorded in "Corporate and Other" for segment reporting purposes, operating expenses increased during the three months ended September 30, 2021 as compared to the same period in 2020, primarily driven by $29.4 million higher personnel costs, $1.8 million higher travel and entertainment costs, $1.1 million higher marketing expenses, $2.6 million higher computer and facility related costs, $1.2 higher depreciation and amortization expense, as well as $3.0 million higher other discretionary spending.

Excluding the impact of deferred compensation, which was recorded in "Corporate and Other" for segment reporting purposes, operating expenses increased by approximately $76.6 million during the three months ended March 31, 2022 as compared to the same period in 2021, primarily driven by $61.5 million higher personnel costs (of which $41.3 million was from acquisitions), $3.5 million higher facility costs, $2.8 million higher travel and entertainment costs, $1.8 million higher technology related costs, and $1.0 million higher marketing expenses, $1.8 million higher depreciation and amortization expense, as well as $4.2 million higher other discretionary spending.

Personnel costs are discussed in further detail under “Operating Practice Groups”.

Nine months ended September 30, 2021 compared to September 30, 2020 .

Total operating expenses for the nine months ended September 30, 2021 increased by $85.6 million, or 14.0%, to $699.2 million as compared to $613.6 million in the same period of 2020.

The non-qualified deferred compensation plan added $11.2 million of expenses for the nine months ended September 30, 2021, and increased operating expenses by $2.8 million during the same period in 2020.

Excluding the impact of deferred compensation, which was recorded in "Corporate and Other" for segment reporting purposes, the operating expense increase was primarily attributed to personnel costs increase of $70.5 million, $3.0 million higher computer and facility related costs, $1.7 million higher marketing expense, as well as $2.5 million higher depreciation and amortization expense.

These increases in operating expense were offset by $2.3 million lower travel and entertainment costs and $2.6 million lower bad debt expense.

Other discretionary spending increased approximately $4.5 million to support business activities.

Corporate General & Administrative (“G&A”) Expenses

Three Months Ended September 30,

(In thousands, except percentages)

G&A expenses $ 13,035 $ 11,339 $ 1,696 15.0 %

G&A expenses % of revenue 4.6 % 4.8 %

G&A expenses excluding deferred compensation $ 13,121 $ 10,666 $ 2,455 23.0 %

G&A expenses excluding deferred compensation % of revenue 4.6 % 4.5 %

Nine Months Ended September 30,

(In thousands, except percentages)

Three Months Ended March 31,

(Amounts in thousands, except percentages)

G&A expenses $ 16,309 $ 14,483 $ 1,826 12.6 %

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G&A expenses excluding deferred compensation % of revenue 4.4 % 4.7 %

Three months ended September 30, 2021 compared to September 30, 2020.

The increase in G&A expenses excluding deferred compensation is primarily due to higher personnel costs of $1.3 million and $1.1 million higher expense for professional services.

Nine months ended September 30, 2021 compared to September 30, 2020.

The increase in G&A expenses excluding deferred compensation is primarily due to higher personnel costs of $5.0 million and $2.3 million higher expenses for professional services.

Legal Settlement, net

On June 24, 2021, we reached a settlement agreement with University of Pittsburgh Medical Center pertaining a lawsuit filed in the U.S.

District Court for the Western District of Pennsylvania.

Under the terms of the settlement agreement, we paid a total settlement amount of $41.5 million and recorded a settlement loss of $30.5 million for the nine months ended September 30, 2021.

The deferred compensation plan decreased G&A expenses by $0.8 million for the three months ended March 31, 2022, but increased G&A expenses by $0.5 million during the same period in 2021.

G&A expenses, excluding the impact of the deferred compensation plan, would have been $17.1 million, or 4.4% of revenue, for the three months ended March 31, 2022, compared to $14.0 million, or 4.7% of revenue, for the same period in 2021.

The increase in G&A expense was primarily due to approximately $1.6 million, or 0.4% of revenue, non-recurring transaction and

integration costs related to the Marks Paneth acquisition, as well as higher legal and other professional services fees.

Other Income (Expense), Net

Three Months Ended September 30,

(In thousands, except percentages)

Three Months Ended March 31,

(Amounts in thousands, except percentages)

Interest expense $ (1,259) $ (877) $ (382) 43.6 %

Loss on sale of operations, net — (74) 74 N/M

Other (expense) income, net (1)

(6,403) 4,789 (11,192) (233.7) %

Total other (expense) income, net $ (2,149) $ 4,866 $ (7,015) N/M

Nine Months Ended September 30,

(In thousands, except percentages)

Interest expense $ (2,852) $ (4,167) $ 1,315 (31.6) %

Gain on sale of operations, net 6,385 78 6,307 N/M

Other income, net (2)

12,029 3,450 8,579 N/M

Total other income (expense), net $ 15,562 $ (639) $ 16,201 N/M

(1) Other (expense) income, net includes a net loss of $0.3 million during the three months ended September 30, 2021, compared to a net gain of $6.0 million for the same period in 2020, associated with the value of investments held in a rabbi trust related to the deferred compensation plan, which were recorded in "Corporate and Other" for segment reporting purposes.

The adjustments to the investments held in a rabbi trust related to the deferred compensation plan are offset by a corresponding increase or decrease to compensation expense, which is recorded as “Operating expenses” and “G&A expenses.” The deferred compensation plan has no impact on “Income from continuing operations before income tax expense” or diluted earnings per share from continuing operations.

In addition, included in Other (expense) income, net for the three months ended September 30, 2021 and 2020, is expense of $0.8 million and $0.1 million, respectively, related to net changes in the fair value of contingent consideration related to prior acquisitions.

(2) Other income, net includes a net gain of $12.4 million during the nine months ended September 30, 2021, compared to a net gain of $3.1 million for the same period in 2020, associated with the value of investments held in a rabbi trust related to the deferred compensation plan, which were recorded in "Corporate and Other" for segment reporting purposes.

Total other (expense) income, net $ (7,662) $ 3,912 $ (11,574) (295.9) %

(1) Other (expense) income, net includes a net loss of $6.5 million during the three months ended March 31, 2022, compared to a net gain of $5.1 million for the same period in 2021, associated with the value of investments held in a rabbi trust related to the deferred compensation plan, which were recorded in "Corporate and Other" for segment reporting purposes.

In addition, included in Other income, net for the nine months ended September 30, 2021 and 2020, is expense of $1.6 million and income of $0.1 million, respectively, related to net changes in the fair value of contingent consideration related to prior acquisitions.

Interest Expense

Three and nine months ended September 30, 2021 compared with September 30, 2020.

Our primary financing arrangement is the 2018 credit facility.

During the three months ended September 30, 2021, our average debt balance and interest rate was $176.5 million and 1.80%, compared to $106.2 million and 2.60% for the same period of 2020.

During the nine months ended September 30, 2021, our average debt balance and interest rate was $156.6 million and 1.89% compared to $170.5 million and 2.46% for the same period of 2020.

The increase in interest expense for the three months ended September 30, 2021 as compared to the same period in 2020 was primarily driven by higher average debt balance, and the decrease in interest expense for the nine months ended September 30, 2021 as compared to the same period in 2020 was primarily driven by lower average debt balance

as well as lower interest rates.

Our indebtedness is further discussed in Note 4, Debt and Financing Arrangements, to the accompanying condensed consolidated financial statements.

Gain on Sale of Operations, Net

Three and nine months ended September 30, 2021 compared with September 30, 2020.

We sold a small book of business and a business unit in the Benefits and Insurance practice group during the nine months ended September 30, 2021.

Total proceeds from the sales were $9.8 million.

Net gain from the sales were approximately $6.4 million.

During the nine months ended September 30, 2020, we sold a small book of business in the Benefits and Insurance practice group and a small accounting firm in the Financial Services practice group for a net gain of $0.1 million.

Other Income (Expense), Net

Three and nine months ended September 30, 2021 compared with September 30, 2020.

For the three months ended September 30, 2021, other expense, net includes a net loss of $0.3 million associated with the non-qualified deferred compensation plan.

For the same period in 2020, other income, net, includes a net gain of $6.0 million associated with the non-qualified deferred compensation plan.

For the nine months ended September 30, 2021, other income, net includes a net gain of $12.4 million associated with the non-qualified deferred compensation plan.

In addition, included in Other (expense) income, net for the three months ended March 31, 2022 and 2021, is expense of $0.6 million and $0.7 million, respectively, related to net changes in the fair value of contingent consideration related to prior acquisitions.

Interest Expense - Our primary financing arrangement is the 2018 credit facility.

During the three months ended March 31, 2022, our average debt balance and weighted average effective interest rate was $244.7 million and 1.79%, compared to $128.2 million and 2.10% for the same period of 2021.

The increase in interest expense for the three months ended March 31, 2022 as compared to the same period in 2021 was primarily driven by higher average debt balance.

Our indebtedness is further discussed in Note 4, Debt and Financing Arrangements, to the accompanying unaudited condensed consolidated financial statements.

Other (Expense) Income, Net - For the three months ended March 31, 2022, other expense, net includes a net loss of $6.5 million associated with the non-qualified deferred compensation plan.

For the same period in 2021, other income, net, includes a net gain of $5.1 million associated with the non-qualified deferred compensation plan.

Income Tax Expense

Three Months Ended September 30,

(In thousands, except percentages)

Income tax expense $ 7,512 $ 7,060 $ 452 6.4 %

Effective tax rate 25.7 % 26.0 %

Nine Months Ended September 30,

(In thousands, except percentages)

Three Months Ended March 31,

(Amounts in thousands, except percentages)

Income tax expense $ 19,321 $ 15,972 $ 3,349 21.0 %

Effective tax rate 24.95 % 24.13 %

Three and nine months ended September 30, 2021 compared with September 30, 2020.

The effective tax rate for the three months ended September 30, 2021 was 25.7%, compared to an effective tax rate of 26.0% for the comparable period in 2020.

The effective tax rate for the nine months ended September 30, 2021 was 24.5%, compared to an effective tax rate of 25.7% for the same period in 2020.

The decrease in the effective tax rate year over year was primarily due to a larger tax benefit recognized in the current year related to stock-based compensation.

The effective tax rate for the three months ended March 31, 2022 was 24.95%, compared to an effective tax rate of 24.13% for the comparable period in 2021.

The increase in the effective tax rate year over year was primarily due to a higher state effective tax rate.

Operating Practice Groups

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Financial Services

Three Months Ended September 30,

(In thousands, except percentages)

Same-unit $ 169,407 $ 155,159 $ 14,248 9.2 %

Acquired businesses 17,825 — 17,825

Divested operations — 340 (340)

Total revenue $ 187,232 $ 155,499 $ 31,733 20.4 %

Operating expenses 156,178 129,922 26,256 20.2 %

Gross margin / Operating income $ 31,054 $ 25,577 $ 5,477 21.4 %

Total other income (expense), net 18 (90) 108 (120.0) %

Income from continuing operations before income tax expenses 31,072 25,487 5,585 21.9 %

Gross margin percent 16.6 % 16.4 %

Nine Months Ended September 30,

(In thousands, except percentages)

Three Months Ended March 31,

(Amounts in thousands, except percentages)

Same-unit $ 225,831 $ 204,149 $ 21,682 10.6 %

Acquired businesses 62,915 — 62,915

Divested operations — 2,278 (2,278)

Total revenue $ 288,746 $ 204,149 $ 84,597 41.4 %

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Gross margin / Operating income $ 78,946 $ 62,403 $ 16,543 26.5 %

Total other income, net 310 7 303 NM

Income from continuing operations before income tax expenses 129,436 102,429 27,007 26.4 %

Total other income, net 86 98 (12) (12.2) %

Income from continuing operations before income tax expense 79,032 62,501 16,531 26.4 %

Gross margin percent 27.3 % 30.6 %

Three months ended September 30, 2021 compared to September 30, 2020

The Financial Services practice group revenue for the three months ended September 30, 2021 grew by 20.4% to $187.2 million from $155.5 million during the same period in 2020.

The Financial Services practice group revenue for the three months ended March 31, 2022 grew by 41.4% to $288.7 million from $204.1 million during the same period in 2021.

Same-unit revenue grew by $21.7 million, or 10.6%, across all service lines, primarily driven by those units that provide traditional accounting and tax-related services, which increased $13.4 million, and those units that provide project-oriented advisory services, which increased by $4.7 million, as well as an increase of $3.9 million in government healthcare compliance business.

The impact of acquired businesses, net of divestitures, contributed $17.5 million, or 9.3% of 2021 revenue.

The impact of acquired businesses contributed $62.9 million, or 21.8% of 2022 revenue, of which Marks Paneth contributed $41.6 million, or 14.4% of 2022 revenue.

We provide a range of services to affiliated CPA firms under joint referral and administrative service agreements (“ASAs”).

Fees earned under the ASAs are recorded as revenue in the accompanying Condensed Consolidated Statements of Comprehensive Income and were approximately $39.7 million and $35.0 million for the three months ended September 30, 2021 and 2020, respectively.

Operating Expenses

Operating expenses increased by $26.3 million, or 20.2%, as compared to the same period last year.

Personnel costs increased by $20.2 million, or 15.5%, with acquisitions contributing approximately $11.2 million to the increase, as well as $1.1 million higher travel and entertainment costs.

In addition, other operating expenses, including marketing, recruiting, professional services, technology, facilities, and depreciation and amortization expenses increased by approximately $3.3 million to support the business growth.

Operating expense as a

percentage of revenue decreased to 83.4% for the quarter ended September 30, 2021 from 83.6% of revenue for the prior year quarter.

Nine months ended September 30, 2021 compared to September 30, 2020

Revenue for the nine months ended September 30, 2021 grew by 16.0% to $578.0 million from $498.4 million during the same period in 2020.

Same-unit revenue grew by $43.1 million, or 8.7%, across all service lines, primarily driven by those units that provide traditional accounting and tax-related services, which increased $24.5 million, and those units that provide project-oriented advisory services, which increased by $14.1 million, as well as an increase of $4.0 million in government healthcare compliance business.

The impact of acquired businesses, net of divestitures, contributed $36.5 million, or 6.3% of 2021 revenue.

Fees earned under the ASAs, as described above, were approximately $139.7 million and $127.4 million for the nine months ended September 30, 2021 and 2020, respectively.

Fees earned under the ASAs are recorded as revenue in the accompanying Condensed Consolidated Statements of Comprehensive Income and were approximately $76.1 million and $54.9 million for the three months ended March 31, 2022 and 2021, respectively.

Operating Expenses

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Personnel costs increased by $52.1 million, or 36.8%, with acquisitions contributing approximately $41.3 million to the increase.

The increase in operating expenses was offset by $0.9 million lower travel and entertainment spending and $2.7 million lower bad debt expense.

In the first half of 2020, due to the COVID-19 pandemic, we recorded bad debt expense of $2.2 million, which did not recur in 2021.

Operating expense as a percentage of revenue decreased to 77.7% during the nine months ended September 30, 2021 from 79.4% of revenue during the same period in 2020.

Compared to the same period in 2021, facility costs, technology costs, professional and consulting services, as well as depreciation and amortization costs increased by approximately $3.4 million, $1.2 million, $1.1 million, and $2.0 million, respectively, primarily due to the Marks Paneth acquisition.

In addition, travel and entertainment costs increase by approximately $1.7 million and other discretionary costs increased by approximately $5.9 million to support the business growth.

Operating expense as a percentage of revenue increased to 72.7% for the three months ended March 31, 2022 from 69.4% of revenue for the prior year quarter.

Benefits and Insurance Services

Three Months Ended September 30,

(In thousands, except percentages)

Three Months Ended March 31,

(Amounts in thousands, except percentages)

Same-unit $ 92,486 $ 86,478 $ 6,008 6.9 %

Acquired businesses 7,759 — 7,759

Divested operations — 761 (761)

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Gross margin / Operating income $ 19,829 $ 20,306 $ (477) (2.3) %

Total other expense, net (9) (44) 35 (79.5) %

Income from continuing operations before income tax expenses 16,749 11,824 4,925 41.7 %

Gross margin percent 19.5 % 16.1 %

Nine Months Ended September 30,

(In thousands, except percentages)

Same-unit $ 236,287 $ 226,311 $ 9,976 4.4 %

Acquired businesses 19,369 — 19,369

Divested operations — 1,122 (1,122)

Total revenue $ 255,656 $ 227,433 $ 28,223 12.4 %

Operating expenses 203,748 188,519 15,229 8.1 %

Gross margin $ 51,908 $ 38,914 $ 12,994 33.4 %

Total other income, net 7,248 263 6,985 NM

Income from continuing operations before income tax expenses 59,156 39,177 19,979 51.0 %

Total other (expense) income, net (24) 174 (198) (113.8) %

Income from continuing operations before income tax expense 19,805 20,480 (675) (3.3) %

Gross margin percent 21.4 % 23.3 %

Three months ended September 30, 2021 compared to September 30, 2020

The Benefits and Insurance Services practice group revenue increased by $11.9 million, or 16.1%, to $85.8 million during the three months ended September 30, 2021 compared to $73.9 million for the same period in 2020.

The increase was primarily driven by the property and casualty and retirement benefit services lines as well as growth in our other project based services.

Acquired businesses, net of divestitures, contributed $7.1 million in incremental revenue for the three months ended September 30, 2021.

The Benefits and Insurance Services practice group revenue increased by $5.2 million, or 6.0%, to $92.5 million during the three months ended March 31, 2022 compared to $87.2 million for the same period in 2021.

Same-unit revenue increased by $6.0 million, or 6.9% when compared to the same period in 2021.

The increase was primarily driven by the property and casualty and retirement benefit services lines as well as growth in our other project based services.

Impact of divested businesses was not material.

Operating Expenses

Operating expenses increased by $5.7 million, or 8.6%, when compared to the same period last year.

Personnel costs increased by $5.1 million, or 8.3%, primarily related to $3.6 million contributed by acquired businesses.

Personnel costs increased by $3.4 million, or 5.1%, primarily due to timing of annual merit increases as well as investment in producers.

In addition, other operating expenses, including marketing, recruiting, professional services, technology, depreciation and amortization expenses, and other direct costs increased by approximately $1.8 million to support increased business activities.

Travel and entertainment cost increased by $0.5 million.

Operating expense as a percentage of revenue decreased to 80.5% for the quarter ended September 30, 2021 from 83.9% of revenue for the same period in 2020.

Nine months ended September 30, 2021 compared to September 30, 2020

The Benefits and Insurance Services practice group revenue increased by $28.2 million, or 12.4%, to $255.7 million during the nine months ended September 30, 2021 compared to $227.4 million for the same period in 2020, primarily driven by acquired businesses, net of divestitures, which contributed $18.2 million in incremental revenue.

Same-unit revenue increased by $10.0 million, or 4.4% when compared to the same period in 2020, primarily driven by growth in property and casualty, employee benefits, retirement benefit services, and human capital management service lines as well as other project based services.

Operating Expenses

Operating expenses increased by $15.2 million, or 8.1%, when compared to the same period last year.

Personnel cost increased by $12.3 million, or 6.5%, primarily related to $10.2 million contributed by acqauired business.

In addition, other operating expenses, including marketing, recruiting, professional services, technology, depreciation and amortization expenses, and other direct costs increased by approximately $3.6 million to support increased business activities.

The increase in operating expense was offset by $0.6 million lower travel and entertainment spending.

Operating expense as a percentage of revenue decreased to 79.7% during the nine months ended September 30, 2021 from 82.9% of revenue for the same period in 2020.

Total Other Income, Net

We sold a business unit during the nine months ended September 30, 2021 for total proceeds of $9.8 million.

Net gain from the sale was approximately $6.4 million.

We also sold a small book of business during the nine months ended September 30, 2021, of which we recorded a gain of $0.7 million.

Operating expense as a percentage of revenue increased to 78.6% for the quarter ended March 31, 2022 from 76.7% of revenue for the same period in 2021.

National Practices

Three Months Ended September 30,

(In thousands, except percentages)

Same-unit revenue $ 9,690 $ 9,009 $ 681 7.6 %

Operating expenses 8,514 8,070 444 5.5 %

Gross margin / Operating Income $ 1,176 $ 939 $ 237 25.2 %

Total other income, net 1 — 1 NM

Income from continuing operations before income tax expenses 1,177 939 238 25.3 %

Gross margin percent 12.1 % 10.4 %

Nine Months Ended September 30,

(In thousands, except percentages)

Three Months Ended March 31,

(Amounts in thousands, except percentages)

Same-unit revenue $ 10,490 $ 9,342 $ 1,148 12.3 %

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Gross margin / Operating Income $ 914 $ 801 $ 113 14.1 %

Total other income, net 1 1 — — %

Income from continuing operations before income tax expenses 2,930 2,653 277 10.4 %

Income from continuing operations before income tax expense 914 801 113 14.1 %

Gross margin percent 8.7 % 8.6 %

Three and nine months ended September 30, 2021 compared with September 30, 2020

Revenue and Operating Expenses

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Revenues from this single client accounted for approximately 75% of the National Practice group’s revenue.

During the three and nine months ended September 30, 2021, revenue increased by $0.7 million, or 7.6%, and $1.5 million, or 5.5%, respectively, while operating expenses increased by $0.4 million, or 5.5%, and $1.2 million, or 4.9%, respectively.

During the three months ended March 31, 2022, revenue increased by $1.1 million, or 12.3%, while operating expenses increased by $1.0 million, or 12.1%.

Corporate and Other

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These expenses primarily consist of certain health care costs, gains or losses attributable to assets held in our non-qualified deferred compensation plan, stock-based compensation, consolidation and integration charges, certain professional fees, certain advertising costs and other various expenses.

Three Months Ended September 30,

(In thousands, except percentages)

Operating expenses $ 4,597 $ 4,755 (158) (3.3) %

Corporate general and administrative expenses 13,035 11,339 1,696 15.0 %

Operating loss (17,632) (16,094) (1,538) 9.6 %

Total other (expense) income, net (2,159) 5,000 (7,159) (143.2) %

Loss from continuing operations before income tax expenses (19,791) (11,094) (8,697) 78.4 %

Nine Months Ended September 30,

(In thousands, except percentages)

Three Months Ended March 31,

(Amounts in thousands, except percentages)

Operating expenses $ (1,734) $ 6,751 (8,485) (125.7) %

Corporate general and administrative expenses 16,309 14,483 1,826 12.6 %

Legal settlement, net 30,468 — 30,468 NM

Operating loss (14,575) (21,234) 6,659 (31.4) %

Total other income (expense), net 8,003 (910) 8,913 (979.5) %

Loss from continuing operations before income tax expenses (84,898) (38,702) (46,196) 119.4 %

Three months ended September 30, 2021 compared to September 30, 2020

Total operating expenses decreased by $0.2 million, or 3.3%, during the three months ended September 30, 2021, as compared to the same period in 2020.

The non-qualified deferred compensation plan decreased operating expenses by $0.2 million for the three months ended September 30, 2021 and increased operating expenses by $5.4 million during the same period in 2020.

Excluding the non-qualified deferred compensation expenses, operating expense increased by approximately $5.4 million, primarily driven by $4.3 million higher personnel costs and $1.0 million higher computer and technology costs to support business growth.

Total Corporate general and administrative expenses increased by $1.7 million, or 15.0%, during the three months ended September 30, 2021, as compared to the same period in 2020.

The non-qualified deferred compensation plan increased G&A expenses by $1.3 million for the three months ended September 30, 2021, and by $0.3 million during the same period in 2020.

Excluding the non-qualified deferred compensation expenses, G&A expense increased by approximately $7.4 million, primarily driven by higher personnel costs of $5.0 million and $2.1 million higher expense for professional services.

Total other (expense) income, net increased by $7.2 million, or 143.2%, during the three months ended September 30, 2021, as compared to the same period in 2020.

Total other (expense) income, net for the three months ended September 30, 2021 includes a net loss of $0.3 million associated with the non-qualified deferred compensation plan.

For the same period in 2020, other income, net includes a net gain of $6.0 million associated with the non-qualified deferred compensation plan.

Excluding the impact of the non-qualified deferred compensation plan, total other (expense) income, net increased by $0.8 million, primarily due to higher fair value adjustment related to the contingent purchase price considerations.

Nine months ended September 30, 2021 compared to September 30, 2020

Total operating expenses increased by $16.3 million, or 339.2%, during the nine months ended September 30, 2021, as compared to the same period in 2020.

The non-qualified deferred compensation plan increased operating expenses by $11.2 million for the nine months ended September 30, 2021, and by $2.8 million during the same period in 2020.

Excluding the non-qualified deferred compensation expenses, operating expense increased by approximately $7.9 million, primarily driven by $6.7 million higher personnel costs and $1.1 million higher marketing costs to support business growth.

Total G&A expenses increased by $8.3 million, or 25.3%, during the nine months ended September 30, 2021, as compared to the same period in 2020.

The non-qualified deferred compensation plan decreased G&A expenses by $0.1 million for the nine months ended September 30, 2021, and increased G&A expense by $0.7 million during the same period in 2020.

Excluding the non-qualified deferred compensation expenses, G&A expense increased by approximately $2.5 million, primarily driven by higher personnel costs of $1.3 million and $1.1 million higher expense for professional services.

On June 24, 2021, we reached a settlement agreement with University of Pittsburgh Medical Center pertaining a lawsuit filed in the U.S.

District Court for the Western District of Pennsylvania.

Under the terms of the settlement agreement, we paid a total settlement amount of $41.5 million and recorded a settlement loss of $30.5 million for the nine months ended September 30, 2021.

Total other income (expense), net increased by $8.9 million, or 979.5%, during the nine months ended September 30, 2021, as compared to the same period in 2020.

Total other income (expense), net for the nine months ended September 30, 2021 includes a net gain of $12.4 million associated with the non-qualified deferred compensation plan.

Total other (expense) income, net (7,724) 3,640 (11,364) N/M

Loss from continuing operations before income tax expense (22,299) (17,594) (4,705) 26.7 %

Total operating expenses decreased by $8.5 million, or 125.7%, during the three months ended March 31, 2022, as compared to the same period in 2021.

The non-qualified deferred compensation plan decreased operating expenses by $5.7 million for the three months ended March 31, 2022 and increased operating expenses by $4.6 million during the same period in 2021.

Excluding the non-qualified deferred compensation expenses, operating expense increased by approximately $2.1 million, primarily driven by higher personnel and technology costs.

Total corporate general and administrative expenses increased by $1.8 million, or 12.6%, during the three months ended March 31, 2022, as compared to the same period in 2021.

The non-qualified deferred compensation plan decreased corporate general and administrative expenses by $0.8 million for the three months ended March 31, 2022, and increased by $0.5 million during the same period in 2021.

Excluding the non-qualified deferred compensation expenses, corporate general and administrative expense increased by approximately $3.1 million, primarily driven by higher personnel costs of $0.4 million, $1.6 million higher transaction related professional services costs associated with the Marks Paneth acquisition, and $1.0 million higher legal costs.

Total other (expense) income, net increased by $11.4 million during the three months ended March 31, 2022, as compared to the same period in 2021.

For the three months ended March 31, 2022, total other expense, net includes a net loss of $6.5 million associated with the non-qualified deferred compensation plan.

For the same period in 2021, other income, net includes a net gain of $5.1 million associated with the non-qualified deferred compensation plan.

Excluding the impact of the non-qualified deferred compensation plan, total other income (expense), net decreased by $0.4 million, primarily due to $1.7 million higher fair value adjustment related to the contingent purchase price considerations, offset by $1.3 million lower interest expense due to lower average outstanding balance and interest rates during 2021 as compared to 2020.

Excluding the impact of the non-qualified deferred compensation plan, total other expense, net would have been $1.3 million in 2022 and $1.5 million in 2021, an increase of approximately $0.2 million.

Our principal sources of liquidity are cash generated from operating activities and financing activities.

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Upon completion of the seasonal accounting and tax services period, cash provided by operations during the remaining three quarters of the fiscal year substantially exceeds the use of cash in the first quarter of the fiscal year.

Accounts receivable balances increase in response to the first nine months revenue generated by the Financial Services practice group.

Accounts receivable balances increase in response to the first three months revenue generated by the Financial Services practice group.

A significant amount of this revenue is billed and collected in subsequent quarters.

Days sales outstanding (“DSO”) from continuing operations represent accounts receivable and unbilled revenue (net of realization adjustments) at the end of the period, divided by trailing twelve months daily revenue.

We provide DSO data because such data is commonly used as a performance measure by analysts and investors and as a measure of our ability to collect on receivables in a timely manner.

DSO was 88 days and 87 days at September 30, 2021 and 2020, respectively.

We provide DSO data because such data is commonly used as a performance measure by analysts and investors and as a measure

of our ability to collect on receivables in a timely manner.

DSO was 94 days and 91 days at March 31, 2022 and 2021, respectively.

DSO at December 31, 2021 was 71 days.

The following table presents selected cash flow information (in thousands).

The following table presents selected cash flow information.

For additional details, refer to the accompanying Condensed Consolidated Statements of Cash Flows.

Nine Months Ended September 30,

Net cash provided by operating activities $ 80,946 $ 81,796

Net cash used in investing activities (70,728) (9,491)

Three Months Ended March 31,

(Amounts in thousands)

Net cash used in operating activities $ (50,890) $ (14,827)

Net cash (used in) provided by investing activities (81,531) 229

Net cash provided by (used in) financing activities 170,446 (2,960)

Net increase (decrease) in cash, cash equivalents and restricted cash $ 38,025 $ (17,558)

Operating Activities - Cash provided by operating activities was $80.9 million during the nine months ended September 30, 2021, primarily due to net income of $80.5 million and certain non-cash items, such as depreciation and amortization expense of $19.9 million, deferred income tax of $7.1 million, and stock-based compensation expense of $8.4 million.

The cash inflow was offset by working capital use of $26.3 million.

Cash provided by operating activities was $81.8 million during the nine months ended September 30, 2020, primarily due to $78.4 million of net income and certain non-cash items, such as depreciation and amortization expense, totaling $24.0 million.

This cash inflow was offset by $20.6 million cash used to fund working capital needs.

Investing Activities - Cash used in investing activities during the nine months ended September 30, 2021 was $70.7 million and consisted primarily of $66.2 million used for business acquisitions, $6.5 million in capital expenditures, and $8.0 million net activity related to funds held for clients.

The use of cash was offset by other investing activities, such as proceeds from sales of divested operations of $9.8 million.

Cash used in investing activities during the nine months ended September 30, 2020 consisted primarily of $33.8 million net cash used for acquisitions, $9.5 million capital expenditures, offset by proceeds from sales and maturities of client fund investments of $33.0 million.

Operating Activities - Cash used in operating activities was $50.9 million during the three months ended March 31, 2022 and primarily consisted of working capital use of $125.1 million, which was offset by net income of $58.1 million and certain non-cash items, such as depreciation and amortization expense of $8.2 million, deferred income tax of $2.9 million, and stock-based compensation expense of $3.7 million.

Cash used in operating activities was $14.8 million during the three months ended March 31, 2021 and primarily consisted of working capital use of $76.1 million, which was offset by net income of $50.2 million and certain non-cash items, such as depreciation and amortization expense of $6.3 million, deferred income tax of $3.3 million, and stock-based compensation expense of $2.9 million.

Investing Activities - Cash used in investing activities during the three months ended March 31, 2022 was $81.5 million and consisted primarily of $72.5 million used for business acquisition, $0.8 million in capital expenditures, $6.0 million net activity related to funds held for clients, and $2.3 million in other activities related to working capital payments and notes receivable.

Cash provided by investing activities during the three months ended March 31, 2021 was $0.2 million and consisted primarily of proceeds from sales and maturities of client fund investments of $3.1 million, offset by $2.0 million cash used for business acquisitions and $1.1 million in capital expenditures.

The balances in funds held for clients and client fund obligations can fluctuate with the timing of cash receipts and the related cash payments.

The nature of these accounts is further described in Note 1, Organization and Summary of Significant Accounting Policies, to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020.

Financing Activities - Cash provided by financing activities during the nine months ended September 30, 2021 was $1.7 million and primarily consisted of $82.2 million in net proceeds from the credit facility, $8.4 million net increase in client fund obligations and $7.1 million proceeds from exercise of stock options, partially offset by $88.0 million in share repurchases and $7.9 million in contingent consideration payments related to prior acquisitions.

Cash used in financing activities during the nine months ended September 30, 2020 primarily consisted of $57.5 million net decrease in client fund obligations, $34.1 million used to repurchase our common stock, as well as $11.2 million in contingent consideration payments related to prior acquisitions, partially offset by $4.5 million in net borrowings under our 2018 credit facility.

The nature of these accounts is further described in Note 1, Basis of Presentation and Significant Accounting Policies, to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021.

Financing Activities - Cash provided by financing activities during the three months ended March 31, 2022 was $170.4 million and primarily consisted of $143.6 million in net proceeds from the credit facility, $42.5 million net increase in client fund obligations and $3.2 million proceeds from exercise of stock options, partially offset by $11.6 million in share repurchases and $7.3 million in contingent consideration payments related to prior acquisitions.

Cash used in financing activities during the three months ended March 31, 2021 was $3.0 million and primarily consisted of $33.1 million in share repurchases, $26.5 million net decrease in client fund obligations, and $1.7 million in contingent consideration payments related to prior acquisitions.

The use of cash was partially offset by $54.0 million in net proceeds from additional borrowings under our 2018 credit facility and $4.4 million proceeds from exercise of stock options during the quarter.

CAPITAL RESOURCES

Credit Facility - At September 30, 2021, we had $190.2 million outstanding under the 2018 credit facility as well as $3.4 million letters of credit.

Available funds under the 2018 credit facility, based on the terms of the commitment, were approximately $201.6 million at September 30, 2021.

The weighted average interest rate under the 2018 credit facility was 1.89% in the first nine months of 2021, compared to 2.46% for the same period in 2020.

Credit Facility - At March 31, 2022, we had $298.9 million outstanding under the 2018 credit facility as well as $5.7 million outstanding letters of credit.

Available funds under the 2018 credit facility, based on the terms of the commitment, were approximately $94.8 million at March 31, 2022.

The weighted average interest rate under the 2018 credit facility was 1.79% during the three months ended March 31, 2022, compared to 2.10% for the same period in 2021.

The 2018 credit facility allows for the allocation of funds for future strategic initiatives, including acquisitions and the repurchase of our common stock, subject to the terms and conditions of the 2018 credit facility.

On April 12, 2022, we launched efforts to amend our 2018 credit facility which expires in April 2023.

The amendment seeks to increase total availability under the current facility to $600 million and will extend the maturity through April 2027.

As of April 26, 2022, we have received formal commitments, subject to final documentation, in excess of the $600 million target.

The amendment is expected to close in early May 2022.

Debt Covenant Compliance - We are required to meet certain financial covenants with respect to (i) total leverage ratio and (ii) a minimum fixed charge coverage ratio.

We are in compliance with our financial covenants as of September 30, 2021.

We are in compliance with our financial covenants as of March 31, 2022.

Our ability to service our debt and to fund future strategic initiatives will depend upon our ability to generate cash in the future.

For further discussion regarding our 2018 credit facility and debt, refer to Note 4, Debt and Financing Arrangements, to the accompanying condensed consolidated financial statements.

For further discussion regarding our 2018 credit facility and debt, refer to Note 4, Debt and Financing Arrangements, to the accompanying unaudited condensed consolidated financial statements.

Use of Capital - Our first priority for use of capital is to make strategic acquisitions.

We also have the financing flexibility and the capacity to actively repurchase shares of our common stock.

We believe that repurchasing shares

of our common stock can be a prudent use of our financial resources, and that investing in our stock is an attractive use of capital and an efficient means to provide value to our stockholders.

We have completed five acquisitions for $66.1 million in cash and $6.9 million in our common stock.

We also repurchased 2.8 million shares of our common stock at a total cost of approximately $87.9 million during the nine months ended September 30, 2021.

Refer to Note 11, Business Combinations, to the accompanying condensed consolidated financial statements for further discussion on acquisitions.

During the first quarter of 2022, we completed one acquisition of Marks Paneth for $72.5 million in cash.

We also repurchased 0.3 million shares of our common stock at a total cost of approximately $12.4 million during the three months ended March 31, 2022.

Refer to Note 11, Business Combinations, to the accompanying unaudited condensed consolidated financial statements for further discussion on acquisitions.

Cash Requirements for 2022 - Cash requirements for the remainder of 2022 will include acquisitions, interest payments on debt, seasonal working capital requirements, contingent earnout payments for previous acquisitions, share repurchases and capital expenditures.

We believe that cash provided by operations, as well as available funds under our credit facility will be sufficient to meet cash requirements.

OFF-BALANCE SHEET ARRANGEMENTS

We maintain administrative service agreements with independent CPA firms (as described more fully under “Business – Financial Services” and in Note 1, Basis of Presentation and Significant Accounting Policies, to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021), which qualify as variable interest entities.

The accompanying condensed consolidated financial statements do not reflect the operations or accounts of variable interest entities as the impact is not material to the financial condition, results of operations, or cash flows of CBIZ.

We provide letters of credit to landlords (lessors) of our leased premises in lieu of cash security deposits, which totaled $3.4 million and $1.7 million at September 30, 2021 and December 31, 2020, respectively.

The accompanying unaudited condensed consolidated financial statements do not reflect the operations or accounts of variable interest entities as the impact is not material to the financial condition, results of operations, or cash flows of CBIZ.

We provide letters of credit to landlords (lessors) of our leased premises in lieu of cash security deposits, which totaled $5.7 million and $3.4 million at March 31, 2022 and December 31, 2021, respectively.

In addition, we provide license bonds to various state agencies to meet certain licensing requirements.

The amount of license bonds outstanding was $2.3 million and $2.2 million at September 30, 2021 and December 31, 2020, respectively.

The amount of license bonds outstanding was $2.3 million and $2.3 million at March 31, 2022 and December 31, 2021, respectively.

We have various agreements under which we may be obligated to indemnify the other party with respect to certain matters.

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Historically, we have not made any payments under these agreements that have been material individually or in the aggregate.

As of September 30, 2021, we are not aware of any material obligations arising under indemnification agreements that would require payment.

As of March 31, 2022, we are not aware of any material obligations arising under indemnification agreements that would require payment.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The SEC defines critical accounting policies as those that are most important to the portrayal of a company’s financial condition and results and that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Our discussion and analysis of our results of operations, financial condition and liquidity are based upon our condensed consolidated financial statements, which have been prepared in accordance with U.S.

Our discussion and analysis of our results of operations, financial condition and liquidity are based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S.

generally accepted accounting principles.

The preparation of these financial statements requires us to make estimates and judgments that affect the amounts of assets and liabilities, revenues and expenses and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements.

As more information becomes known, these estimates and assumptions could change, which would have an impact on actual results that may differ materially from these estimates and judgments under different assumptions.

more information becomes known, these estimates and assumptions could change, which would have an impact on actual results that may differ materially from these estimates and judgments under different assumptions.

We have not made any changes to our critical accounting policies and estimates as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

NEW ACCOUNTING PRONOUNCEMENTS

Refer to Note 2, New Accounting Pronouncements, to the accompanying condensed consolidated financial statements for a discussion of recently issued accounting pronouncements.

Refer to Note 2, New Accounting Pronouncements, to the accompanying unaudited condensed consolidated financial statements for a discussion of recently issued accounting pronouncements.

FORWARD-LOOKING STATEMENTS

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis