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Item 1. Financial Statements

2023-10-26 compared with 2023-07-27 · 131 added, 90 removed, 599 unchanged (27% of the section changed)

3 unchanged sentences

(In thousands)

September 30,

2023 December 31,

50 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

7 unchanged sentences

Gain on sale of operations, net 77 176 176 311

Other income (expense), net 5,421 ( 15,903 ) 10,533 ( 22,310 )

Total other (expense) income, net ( 113 ) ( 17,413 ) 1,457 ( 25,079 )

Other (expense) income, net ( 2,288 ) ( 2,622 ) 8,245 ( 24,932 )

Total other expense, net ( 8,059 ) ( 4,751 ) ( 6,602 ) ( 29,830 )

Income before income tax expense 47,196 36,601 185,372 157,926

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Income Totals

March 31, 2023 137,024 86,712 $ 1,370 $ 814,686 $ 807,276 $ ( 853,793 ) $ 2,391 $ 771,930

June 30, 2023 137,081 87,259 $ 1,371 $ 818,693 $ 834,139 $ ( 882,088 ) $ 3,928 $ 776,043

Net income — — — — 33,682 — — 33,682

1 unchanged sentence

Share repurchases — 176 — — — ( 9,472 ) — ( 9,472 )

Indirect repurchase of shares for minimum tax withholding — 4 — — — ( 224 ) — ( 224 )

Restricted stock units and awards 9 — 1 ( 1 ) — — — —

3 unchanged sentences

Excise tax on share repurchases — — — 150 — ( 96 ) — 54

June 30, 2023 137,081 87,259 $ 1,371 $ 818,693 $ 834,139 $ ( 882,088 ) $ 3,928 $ 776,043

September 30, 2023 137,356 87,439 $ 1,374 $ 828,864 $ 867,821 $ ( 891,880 ) $ 4,415 $ 810,594

Shares Treasury

6 unchanged sentences

Income Totals

March 31, 2022 135,756 83,462 $ 1,358 $ 777,731 $ 686,889 $ ( 707,088 ) $ 958 $ 759,848

June 30, 2022 135,823 84,221 $ 1,358 $ 781,142 $ 718,144 $ ( 737,559 ) $ 1,438 $ 764,523

Net income — — — — 27,470 — — 27,470

1 unchanged sentence

Share repurchases — 744 — — — ( 32,422 ) — ( 32,422 )

Indirect repurchase of shares for minimum tax withholding — 23 — — — ( 916 ) — ( 916 )

Restricted stock units and awards 1 — — — — — — —

1 unchanged sentence

Stock-based compensation — — — 5,559 — — — 5,559

June 30, 2022 135,823 84,221 $ 1,358 $ 781,142 $ 718,144 $ ( 737,559 ) $ 1,438 $ 764,523

Business acquisitions 68 — 1 2,717 — — — 2,718

September 30, 2022 136,146 84,965 $ 1,361 $ 793,514 $ 745,614 $ ( 769,981 ) $ 3,617 $ 774,125

See the accompanying notes to the unaudited condensed consolidated financial statement

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Excise tax on share repurchases — — — 537 — ( 654 ) — ( 117 )

June 30, 2023 137,081 87,259 $ 1,371 $ 818,693 $ 834,139 $ ( 882,088 ) $ 3,928 $ 776,043

September 30, 2023 137,356 87,439 $ 1,374 $ 828,864 $ 867,821 $ ( 891,880 ) $ 4,415 $ 810,594

Shares Treasury

16 unchanged sentences

Business acquisitions 87 — 1 3,424 — — — 3,425

June 30, 2022 135,823 84,221 $ 1,358 $ 781,142 $ 718,144 $ ( 737,559 ) $ 1,438 $ 764,523

September 30, 2022 136,146 84,965 $ 1,361 $ 793,514 $ 745,614 $ ( 769,981 ) $ 3,617 $ 774,125

See the accompanying notes to the unaudited condensed consolidated financial statements

2 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

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Other, net — ( 2,072 )

Net cash provided by financing activities 21,793 91,655

Net (decrease) increase in cash, cash equivalents and restricted cash ( 14,095 ) 30,407

Net cash (used in) provided by financing activities ( 18,442 ) 6,025

Net decrease in cash, cash equivalents and restricted cash ( 37,818 ) ( 29,466 )

Cash, cash equivalents and restricted cash at beginning of year 160,145 150,474

48 unchanged sentences

We assess and review the impact of all issued ASUs.

During the six months ended June 30, 2023, we have implemented all new ASUs that are in effect and that may impact our consolidated financial statements.

During the nine months ended September 30, 2023, we have implemented all new ASUs that are in effect and that may impact our consolidated financial statements.

Accounting Standards Adopted in 2023

In August 2023, the FASB issued ASU No.

2023-04, Liabilities (Topic 405):

Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.

121 , which amended and added various SEC paragraphs in the ASC to reflect the issuance of SEC Staff Bulletin No.

We adopted ASU No.

2023-04 upon issuance and the adoption had no material impact on our condensed consolidated financial statements and related disclosures.

In July 2023, the FASB issued ASU No.

2023-03, Presentation of Financial Statements (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718):

Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.

120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280 - General Revision of Regulation S-X:

Income or Loss Applicable to Common Stock, which amended and added various SEC paragraphs in the ASC to reflect the issuance of SEC Staff Bulletin No.

We adopted ASU No.

2023-04 upon issuance and the adoption had no material impact on our condensed consolidated financial statements and related disclosures.

ACCOUNTS RECEIVABLE, NET

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Receivables are charged-off against the allowance when the balance is deemed uncollectible.

Accounts receivable, net, at June 30, 2023 and December 31, 2022 was as follows (in thousands):

Accounts receivable, net, at September 30, 2023 and December 31, 2022 was as follows (in thousands):

September 30,

2023 December 31,

4 unchanged sentences

Accounts receivable, net $ 465,848 $ 334,498

Changes to the allowance for doubtful accounts for the six months ended June 30, 2023 and twelve months ended December 31, 2022 were as follows (in thousands):

Changes to the allowance for doubtful accounts for the nine months ended September 30, 2023 and twelve months ended December 31, 2022 were as follows (in thousands):

September 30,

2023 December 31,

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The 2022 credit facility matures on May 4, 2027.

The balance outstanding under the 2022 credit facility was $ 410.6 million and $ 265.7 million at June 30, 2023 and December 31, 2022, respectively.

The combined effective interest rates under the 2018 and 2022 credit facilities, including the impact of interest rate swaps associated with those credit facilities, for the six months ended June 30, 2023 and 2022 were as follows:

Six Months Ended

The balance outstanding under the 2022 credit facility was $ 394.7 million and $ 265.7 million at September 30, 2023 and December 31, 2022, respectively.

The combined effective interest rates under the 2018 and 2022 credit facilities, including the impact of interest rate swaps associated with those credit facilities, for the nine months ended September 30, 2023 and 2022 were as follows:

Nine Months Ended

September 30,

Weighted average rates 5.16 % 2.29 %

1 unchanged sentence

1.08 % - 4.18 %

We had approximately $ 177.5 million of available funds under the 2022 credit facility at June 30, 2023, net of outstanding letters of credit of $ 4.4 million.

We had approximately $ 195.0 million of available funds under the 2022 credit facility at September 30, 2023, net of outstanding letters of credit of $ 4.4 million.

Available funds under the credit facility are based on a multiple of earnings before interest, taxes, depreciation and amortization as defined in the credit facility, and are reduced by letters of credit, other indebtedness and outstanding borrowings under the credit facility.

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In addition, the 2022 credit facility contains financial covenants that require us to meet certain requirements with respect to (i) a total leverage ratio and (ii) minimum interest coverage ratio which may limit our ability to borrow up to the total commitment amount.

As of June 30, 2023, we are in compliance with all covenants.

As of September 30, 2023, we are in compliance with all covenants.

Other Line of Credit - We have an unsecured $ 20.0 million line of credit by and among CBIZ Benefits and Insurance, Inc.

1 unchanged sentence

We utilize this line to support our short-term funding requirements of payroll client fund obligations due to the investment of client funds, rather than liquidating client funds that have already been invested in available-for-sale securities.

The line of credit, which was renewed on August 1, 2022 and will terminate on August 3, 2023, did no t have a balance outstanding at June 30, 2023.

We intend to renew this line of credit.

Interest Expense - Interest expense, including amortization of deferred financing costs, commitment fees, line of credit fees, and other applicable bank charges, for the three and six months ended June 30, 2023 and 2022 was as follows (in thousands):

Three Months Ended June 30,

The line of credit, which was renewed on August 3, 2023 and will terminate on August 1, 2024, did no t have a balance outstanding at September 30, 2023.

Interest Expense - Interest expense, including amortization of deferred financing costs, commitment fees, line of credit fees, and other applicable bank charges, for the three and nine months ended September 30, 2023 and 2022 was as follows (in thousands):

Three Months Ended September 30,

Credit facilities $ 5,848 $ 2,301

1 unchanged sentence

Total $ 5,848 $ 2,305

Six Months Ended June 30,

Nine Months Ended September 30,

Credit facilities $ 14,986 $ 5,204

2 unchanged sentences

COMMITMENTS AND CONTINGENCIES

Letters of Credit and Guarantees - We provide letters of credit to landlords (lessors) of our leased premises in lieu of cash security deposits, which totaled $ 4.4 million and $ 5.0 million at June 30, 2023 and December 31, 2022, 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 $ 2.3 million at June 30, 2023 and December 31, 2022, respectively.

The amount of license bonds outstanding was $ 2.3 million and $ 2.3 million at September 30, 2023 and December 31, 2022, respectively.

Legal Proceedings - On December 19, 2016, CBIZ Operations, Inc.

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The court also ruled in favor of CBIZ on its counterclaim for indemnification under contract.

The trial court is expected to set further proceedings to determine the amount of damages owed by Zotec to CBIZ.

The trial court has scheduled a hearing for November 2, 2023, to consider evidence regarding the amount of damages owed by Zotec to CBIZ on the counterclaim.

In addition to the item disclosed above, the Company is, from time to time, subject to claims and lawsuits arising in the ordinary course of business.

5 unchanged sentences

These investments, primarily consisting of corporate and municipal bonds, are classified as available-for-sale and are included in the “Funds held for clients” line item on the accompanying unaudited Condensed Consolidated Balance Sheets.

The par value of these investments totaled $ 41.2 million and $ 44.4 million at June 30, 2023 and December 31, 2022, respectively, and had maturity or callable dates ranging from July 2023 through November 2025.

At June 30, 2023, unrealized losses on the securities were not material and have not been recognized as a credit loss because the bonds are investment grade quality and management is not required or does not intend to sell prior to an expected recovery in value.

The par value of these investments totaled $ 40.0 million and $ 44.4 million at September 30, 2023 and December 31, 2022, respectively, and these investments have maturity or callable dates ranging from October 2023 through November 2025.

At September 30, 2023, unrealized losses on the securities were not material and have not been recognized as a credit loss because the bonds are investment grade quality and management is not required or does not intend to sell prior to an expected recovery in value.

The bond issuers continue to make timely principal and interest payments.

The following table summarizes activities related to these investments for the six months ended June 30, 2023 and the twelve months ended December 31, 2022 (in thousands):

Six Months Ended June 30, 2023 Twelve Months Ended December 31, 2022

The following table summarizes activities related to these investments for the nine months ended September 30, 2023 and the twelve months ended December 31, 2022 (in thousands):

Nine Months Ended September 30, 2023 Twelve Months Ended December 31, 2022

Fair value at beginning of period $ 43,485 $ 38,670

5 unchanged sentences

Fair value at end of period $ 39,328 $ 43,485

In addition to the available-for-sale debt securities discussed above, we also held other depository assets in the amount of $ 0.9 million and $ 0.9 million at June 30, 2023 and December 31, 2022, respectively.

In addition to the available-for-sale debt securities discussed above, we also held other depository assets in the amount of $ 0.5 million and $ 0.9 million at September 30, 2023 and December 31, 2022, respectively.

Those depository assets are classified as Level 1 in the fair value hierarchy.

4 unchanged sentences

During the second quarter of 2023, one interest rate swap expired with a notional value of $ 15.0 million.

As of June 30, 2023, we have four interest rate swaps outstanding.

As of September 30, 2023, we have four interest rate swaps outstanding.

Under the terms of the interest rate swaps, we pay interest at a fixed rate of interest plus applicable margin as stated in the amended agreements, and receive interest that varies with the one-month Term SOFR.

The following table summarizes our outstanding interest rate swaps and their classification in the accompanying unaudited Condensed Consolidated Balance Sheets at June 30, 2023 and December 31, 2022 (amounts in thousands):

June 30, 2023

The following table summarizes our outstanding interest rate swaps and their classification in the accompanying unaudited Condensed Consolidated Balance Sheets at September 30, 2023 and December 31, 2022 (amounts in thousands):

September 30, 2023

Amount Fixed Rate Expiration Fair

12 unchanged sentences

Refer to Note 7, Fair Value Measurements, for additional disclosures regarding fair value measurements.

The following table summarizes the effects of the interest rate swaps on the accompanying unaudited Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2023 and 2022 (in thousands):

The following table summarizes the effects of the interest rate swaps on the accompanying unaudited Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended

September 30, 2023 and 2022 (in thousands):

Gain Recognized

2 unchanged sentences

Three Months Ended

June 30, Three Months Ended

September 30, Three Months Ended

September 30,

2023 2022 2023 2022

Interest rate swaps $ 1,163 $ 2,815 $ 1,122 $ 220

Six Months Ended

June 30, Six Months Ended

Nine Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

1 unchanged sentence

FAIR VALUE MEASUREMENTS

The following table summarizes our assets and (liabilities) at June 30, 2023 and December 31, 2022, respectively, that are measured at fair value on a recurring basis subsequent to initial recognition and indicates the fair value hierarchy of the valuation techniques utilized by us to determine such fair value (in thousands):

Level June 30, 2023 December 31, 2022

The following table summarizes our assets and (liabilities) at September 30, 2023 and December 31, 2022, respectively, that are measured at fair value on a recurring basis subsequent to initial recognition and indicates the fair value hierarchy of the valuation techniques utilized by us to determine such fair value (in thousands):

Level September 30, 2023 December 31, 2022

Deferred compensation plan assets 1 $ 130,284 $ 118,862

4 unchanged sentences

Contingent purchase price liabilities 3 ( 120,014 ) ( 132,010 )

During the six months ended June 30, 2023 and 2022, there were no transfers between the valuation hierarchy Levels 1, 2 and 3.

The following table summarizes the change in Level 3 fair values of our contingent purchase price liabilities for the six months ended June 30, 2023 and 2022 (pre-tax basis) (in thousands):

During the nine months ended September 30, 2023 and 2022, there were no transfers between the valuation hierarchy Levels 1, 2 and 3.

The following table summarizes the change in Level 3 fair values of our contingent purchase price liabilities for the nine months ended September 30, 2023 and 2022 (pre-tax basis) (in thousands):

Beginning balance – December 31 $ ( 132,010 ) $ ( 79,139 )

3 unchanged sentences

Change in net present value of contingencies ( 2,129 ) ( 2,378 )

Ending balance – June 30 $ ( 130,465 ) $ ( 136,435 )

Ending balance – September 30 $ ( 120,014 ) $ ( 141,208 )

Contingent purchase price liabilities result from our business acquisitions and are recorded at fair value at the time of acquisition and are presented as “Contingent purchase price liabilities — current” and “Contingent purchase price liabilities — non-current” in the accompanying unaudited Condensed Consolidated Balance Sheets.

9 unchanged sentences

OTHER COMPREHENSIVE INCOME

The following table is a summary of other comprehensive income and discloses the tax impact of each component of other comprehensive income for the three and six months ended June 30, 2023 and 2022 (in thousands):

The following table is a summary of other comprehensive income and discloses the tax impact of each component of other comprehensive income for the three and nine months ended September 30, 2023 and 2022 (in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

1 unchanged sentence

$ 172 $ ( 457 ) $ 510 $ ( 1,614 )

Net unrealized gain (loss) on interest rate swaps, net of income taxes (2)

Net unrealized gain on interest rate swaps, net of income taxes (2)

321 2,647 316 6,218

1 unchanged sentence

Total other comprehensive income $ 487 $ 2,179 $ 811 $ 4,584

(1) Net of income tax expense of $ 64 and income tax benefit of $ 81 for the three months ended June 30, 2023 and 2022, respectively, and net of income tax expense of $ 135 and income tax benefit of $ 433 for the six months ended June 30, 2023 and 2022, respectively.

(2) Net of income tax expense of $ 449 and income tax expense of $ 250 for the three months ended June 30, 2023 and 2022, respectively, and net of income tax benefit of $ 14 and income tax expense of $ 1,178 for the six months ended June 30, 2023 and 2022, respectively.

(1) Net of income tax expense of $ 68 and income tax benefit of $ 171 for the three months ended September 30, 2023 and 2022, respectively, and net of income tax expense of $ 203 and income tax benefit of $ 604 for the nine months ended September 30, 2023 and 2022, respectively.

(2) Net of income tax expense of $ 108 and income tax expense of $ 863 for the three months ended September 30, 2023 and 2022, respectively, and net of income tax expense of $ 94 and income tax expense of $ 2,041 for the nine months ended September 30, 2023 and 2022, respectively.

EMPLOYEE STOCK PLANS

7 unchanged sentences

Refer to the Annual Report on Form 10-K for the year ended December 31, 2022 for further discussion on the 2019 Plan.

Compensation expense for stock-based awards recognized during the three and six months ended June 30, 2023 and 2022 was as follows (in thousands):

Compensation expense for stock-based awards recognized during the three and nine months ended September 30, 2023 and 2022 was as follows (in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

3 unchanged sentences

Total stock-based compensation expense $ 3,102 $ 5,559 $ 9,721 $ 11,987

Stock Options and Restricted Stock Units and Awards – The following table presents our stock options and restricted stock units and awards activity during the six months ended June 30, 2023 (in thousands, except per share data):

Stock Options and Restricted Stock Units and Awards – The following table presents our stock options and restricted stock units and awards activity during the nine months ended September 30, 2023 (in thousands, except per share data):

Stock Options Restricted Stock Units and Awards

5 unchanged sentences

Exercised or released ( 433 ) $ 19.34 ( 163 ) $ 31.63

Outstanding at June 30, 2023 382 $ 25.64 232 $ 41.09

Exercisable at June 30, 2023 382 $ 25.64

Outstanding at September 30, 2023 170 $ 33.36 223 $ 41.19

Exercisable at September 30, 2023 170 $ 33.36

(1) Represents weighted average market value of the shares;

3 unchanged sentences

The following weighted average assumptions were utilized:

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Expected volatility (1) 28.57 %

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For performance achieved above specified levels, the recipient may earn additional shares of stock, not to exceed 200 % of the number of PSUs initially granted.

The following table presents our PSUs activity during the six months ended June 30, 2023 (in thousands, except per share data):

The following table presents our PSUs activity during the nine months ended September 30, 2023 (in thousands, except per share data):

Share Units Weighted

2 unchanged sentences

Vested ( 244 ) $ 25.75

Outstanding at June 30, 2023 326 $ 36.46

Adjustments for performance results (2)

Outstanding at September 30, 2023 464 $ 33.84

(1) Represents weighted average market value of the performance share units;

PSUs are granted at no cost to the recipients.

(2) Represents the change in the number of performance awards earned based on performance achievement for the performance period.

EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share for the three and six months ended June 30, 2023 and 2022 (in thousands, except per share data):

The following table sets forth the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2023 and 2022 (in thousands, except per share data):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

12 unchanged sentences

Diluted earnings per share $ 0.67 $ 0.53 $ 2.64 $ 2.22

(1) A total of 12 thousand and 53 thousand shares of stock-based awards were excluded from the calculation of diluted earnings per share for three and six months ended June 30, 2023, respectively, as their effect would be anti-dilutive.

A total of 17 thousand and 86 thousand shares of stock-based awards were excluded from the calculation of diluted earnings per share for three and six months ended June 30, 2022, respectively, as their effect would be anti-dilutive.

(1) A total of 60 thousand shares of stock-based awards were excluded from the calculation of diluted earnings per share for nine months ended September 30, 2023, as their effect would be anti-dilutive.

A total of 72 thousand shares of stock-based awards were excluded from the calculation of diluted earnings per share for the nine months ended September 30, 2022, as their effect would be anti-dilutive.

No stock-based awards were excluded from the calculation of diluted earnings per share for the three months ended September 30, 2023 and 2022, as their effect was dilutive.

(2) Contingent shares represent additional shares to be issued for purchase price earned by former owners of businesses acquired by us once future considerations have been met.

Refer to Note 11, Business Combinations, for further details.

(3) The denominator used in calculating diluted earnings per share did not include 220 thousand PSUs for both the three and six months ended June 30, 2023, and the denominator used in calculating diluted earnings per share did not include 360 thousand PSUs for both the three and six months ended June 30, 2022.

The performance conditions associated with these performance share units were not met and consequently none of these PSUs were considered as issuable for the three and six months ended June 30, 2023 and 2022.

(3) The denominator used in calculating diluted earnings per share did not include 187 thousand PSUs for both the three and nine months ended September 30, 2023, and the denominator used in calculating diluted earnings per share did not include 237 thousand PSUs for both the three and nine months ended September 30, 2022.

The performance conditions associated with these performance share units were not met and consequently none of these PSUs were considered as issuable for the three and nine months ended September 30, 2023 and 2022.

BUSINESS COMBINATIONS

Business Combinations

During the six months ended June 30, 2023, we completed the following acquisitions:

During the nine months ended September 30, 2023, we completed the following acquisitions:

• Effective January 1, 2023, we acquired all of the assets of Danenhauer and Danenhauer, Inc ("Danenhauer and Danenhauer").

12 unchanged sentences

are reported in the Financial Services practice group.

During the six months ended June 30, 2022, we completed the following acquisition:

• Effective July 1, 2023, we acquired all of the assets of American Pension Advisors, Ltd.

APA, based in Indianapolis, Indiana, is a provider of full-service retirement plan consulting and administration assisting more than 1,200 clients in the design, implementation, and administration of all types of retirement plans including 401(k), 403(b), 457(b), defined benefit and cash balance.

Operating results for APA are reported in the Benefits and Insurance Services practice group.

During the nine months ended September 30, 2022, we completed the following acquisition:

• Effective January 1, 2022, we acquired all of the non-attest assets of Marks Paneth LLP ("Marks Paneth").

2 unchanged sentences

Operating results are reported in the Financial Services practice group.

The acquisitions of Danenhauer and Danenhauer, Somerset, PPS and Ickovic and Co.

(together, the “2023 Acquisitions”) are expected to add approximately $ 64.4 million annualized revenue in 2023.

For the six months ended June 30, 2023, we recorded approximately $ 2.5 million in non-recurring transaction, retention and integration related costs associated with the Somerset acquisition.

Pro forma results of operations for these acquisitions have not been presented because the effects of these acquisitions were not material, either individually or in aggregate, to our total revenue and net income for the three and six months ended June 30, 2023 and 2022, respectively.

The following table summarizes the consideration and purchase price allocation for the acquisitions completed during the six months ended June 30, 2023 and 2022, respectively (in thousands):

• Effective July 1, 2022, we acquired substantially all the assets of Stinnett & Associates, LLC ("Stinnett").

Stinnett, located in Tulsa, Oklahoma, is a professional advisory firm and certified Women's Business Enterprise providing internal audit, Sarbanes-Oxley compliance, cybersecurity reviews, business continuity and disaster recovery, and fraud investigations to businesses of all sizes including Fortune 1000 organizations in a variety of industries.

Operating results are reported in the Financial Services practice group.

The acquisitions of Danenhauer and Danenhauer, Somerset, PPS, Ickovic and Co., and APA (together, the “2023 Acquisitions”) are expected to add approximately $ 67.3 million annualized revenue in 2023.

For the nine months ended September 30, 2023, we recorded approximately $ 3.1 million in non-recurring transaction, retention and integration related costs associated with the Somerset acquisition.

Pro forma results of operations for these acquisitions have not been presented because the effects of these acquisitions were not material, either individually or in aggregate, to our total revenue and net income for the three and nine months ended September 30, 2023 and 2022, respectively.

The following table summarizes the consideration and purchase price allocation for the acquisitions completed during the nine months ended September 30, 2023 and 2022, respectively (in thousands):

Common stock issued (number) 102 42

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Provisional estimates of fair value are established at the time of each acquisition and are subsequently reviewed within the first year of operations subsequent to the acquisition date to determine the necessity for adjustments.

Fair value estimates of the 2023 Acquisitions were provisional as of June 30, 2023, primarily related to the value established for certain identifiable intangible assets and contingent purchase price consideration.

The following table summarizes the goodwill and intangible asset amounts resulting from those acquisitions for the six months ended June 30, 2023 and 2022, respectively (in thousands):

Six Months Ended June 30,

Fair value estimates of the 2023 Acquisitions were provisional as of September 30, 2023, primarily related to the value established for certain identifiable intangible assets and contingent purchase price consideration.

The following table summarizes the goodwill and intangible asset amounts resulting from those acquisitions for the nine months ended September 30, 2023 and 2022, respectively (in thousands):

Nine Months Ended September 30,

Financial Services Benefits and Insurance Services Financial Services Benefits and Insurance Services

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Client lists and non-compete agreements are valued using a discounted cash flow model based on management estimates of future cash flows from such assets.

The following table summarizes the changes in contingent purchase price consideration for previous acquisitions and contingent payments made for previous business acquisitions in the three and six months ended June 30, 2023 and 2022, respectively (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

The following table summarizes the changes in contingent purchase price consideration for previous acquisitions and contingent payments made for previous business acquisitions in the three and nine months ended September 30, 2023 and 2022, respectively (in thousands):

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

2023 2022 2023 2022

2 unchanged sentences

Shares issued (number) 54 26 129 45

Divestitures and Sales of Assets

Sales of assets are recorded as "Other (expense) income, net” in the accompanying Consolidated Statements of Comprehensive Income.

During the three and nine months ended September 30, 2023, we recorded a gain of $ 1.4 million and $ 1.5 million, respectively, related to the sale of one technology asset in the Financial Services practice group.

During the three and nine months ended September 30, 2022, we sold one book of business for $ 2.5 million in the Benefits and Insurance Services practice group and recorded a gain of $ 2.4 million.

SEGMENT DISCLOSURES

18 unchanged sentences

Performance of the practice groups is evaluated on income (loss) before income tax expense (benefit) excluding those costs listed above, which are reported in the “Corporate and Other”.

Segment information for the three and six months ended June 30, 2023 and 2022 is presented below.

Segment information for the three and nine months ended September 30, 2023 and 2022 is presented below.

We do not manage our assets on a segment basis, therefore segment assets are not presented below.

The following table disaggregates our revenue by source (in thousands):

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Services Benefits and

7 unchanged sentences

Total revenue $ 298,372 $ 100,287 $ 11,880 $ 410,539

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Services Benefits and

7 unchanged sentences

Total revenue $ 259,998 $ 92,067 $ 11,197 $ 363,262

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Services Benefits and

7 unchanged sentences

Total revenue $ 932,388 $ 296,179 $ 35,080 $ 1,263,647

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Services Benefits and

7 unchanged sentences

Total revenue $ 808,052 $ 276,261 $ 32,623 $ 1,116,936

Segment information for the three months ended June 30, 2023 and 2022 was as follows (in thousands):

Three Months Ended June 30, 2023

Segment information for the three months ended September 30, 2023 and 2022 was as follows (in thousands):

Three Months Ended September 30, 2023

Services Benefits

8 unchanged sentences

Interest expense — — — ( 5,848 ) ( 5,848 )

Other income, net 235 153 1 5,032 5,421

Gain on sale of operations, net 77 — — — 77

Other income (expense), net 1,497 267 — ( 4,052 ) ( 2,288 )

Total other income (expense), net 1,574 267 — ( 9,900 ) ( 8,059 )

Income (loss) before income tax expense $ 50,266 $ 20,918 $ 1,213 $ ( 25,201 ) $ 47,196

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Services Benefits

12 unchanged sentences

Income (loss) before income tax expense $ 39,940 $ 21,144 $ 1,462 $ ( 25,945 ) $ 36,601

Segment information for the six months ended June 30, 2023 and 2022 was as follows (in thousands):

Six Months Ended June 30, 2023

Segment information for the nine months ended September 30, 2023 and 2022 was as follows (in thousands):

Nine Months Ended September 30, 2023

Services Benefits

10 unchanged sentences

Other income, net 1,987 597 1 5,660 8,245

Total other income, net 589 329 1 538 1,457

Total other income (expense), net 2,163 596 1 ( 9,362 ) ( 6,602 )

Income (loss) before income tax expense $ 196,983 $ 61,842 $ 3,286 $ ( 76,739 ) $ 185,372

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Services Benefits

12 unchanged sentences

Income (loss) before income tax expense $ 168,857 $ 57,624 $ 3,414 $ ( 71,969 ) $ 157,926

SUBSEQUENT EVENTS

Subsequent to September 30, 2023, and up to October 24, 2023, we repurchased approximately 0.1 million shares of our common stock in the open market at a total cost of approximately $ 4.3 million.

Effective October 16, 2023, we entered into a new 5-year interest rate swap with a notional value of $ 25 million and fixed rate of 4.488 %.

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 1. Financial Statements