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Item 1. Financial Statements

2024-11-07 compared with 2024-08-01 · 160 added, 123 removed, 511 unchanged (36% of the section changed)

3 unchanged sentences

(In thousands)

September 30,

2024 December 31,

50 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

7 unchanged sentences

Gain on sale of operations, net 4,953 77 4,953 176

Other income, net 2,483 5,421 11,907 10,533

Total other (expense) income, net ( 3,401 ) ( 113 ) 1,512 1,457

Other income (expense), net 1,300 ( 2,288 ) 13,207 8,245

Total other income (expense), net 1,285 ( 8,059 ) 2,797 ( 6,602 )

Income before income tax expense 50,971 47,196 183,178 185,372

22 unchanged sentences

Income (Loss) Totals

March 31, 2024 137,855 87,743 $ 1,379 $ 841,268 $ 931,968 $ ( 910,322 ) $ 2,796 $ 867,089

June 30, 2024 137,905 87,743 $ 1,379 $ 845,962 $ 951,761 $ ( 910,322 ) $ 2,654 $ 891,434

Net income — — — — 35,084 — — 35,084

Other comprehensive loss — — — — — — ( 2,497 ) ( 2,497 )

Indirect repurchase of shares for minimum tax withholding — 3 — — — ( 215 ) — ( 215 )

Restricted stock units and awards 6 — — — — — — —

1 unchanged sentence

Business acquisitions 23 — — 1,699 — — — 1,699

June 30, 2024 137,905 87,743 $ 1,379 $ 845,962 $ 951,761 $ ( 910,322 ) $ 2,654 $ 891,434

September 30, 2024 137,934 87,746 $ 1,379 $ 850,076 $ 986,845 $ ( 910,537 ) $ 157 $ 927,920

Shares Treasury

6 unchanged sentences

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

See the accompanying notes to the unaudited condensed consolidated financial statement

9 unchanged sentences

Comprehensive

Income Totals

Income (Loss) Totals

December 31, 2023 137,387 87,573 $ 1,374 $ 832,475 $ 855,084 $ ( 899,093 ) $ 1,778 $ 791,618

Net income — — — — 131,761 — — 131,761

Other comprehensive income — — — — — — 876 876

Other comprehensive loss — — — — — — ( 1,621 ) ( 1,621 )

Indirect repurchase of shares for minimum tax withholding — 173 — — — ( 11,444 ) — ( 11,444 )

3 unchanged sentences

Business acquisitions 150 — 1 10,174 — — — 10,175

June 30, 2024 137,905 87,743 $ 1,379 $ 845,962 $ 951,761 $ ( 910,322 ) $ 2,654 $ 891,434

September 30, 2024 137,934 87,746 $ 1,379 $ 850,076 $ 986,845 $ ( 910,537 ) $ 157 $ 927,920

Shares Treasury

4 unchanged sentences

Stock Accumulated

Comprehensive Income Totals

Comprehensive

Income Totals

December 31, 2022 136,295 86,115 $ 1,363 $ 799,147 $ 734,116 $ ( 824,778 ) $ 3,604 $ 713,452

9 unchanged sentences

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

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:

33 unchanged sentences

Payment of contingent consideration for acquisitions and client lists ( 50,861 ) ( 40,076 )

Net cash (used in) provided by financing activities ( 11,920 ) 21,793

Other, net ( 241 ) —

Net cash used in financing activities ( 85,222 ) ( 18,442 )

Net decrease in cash, cash equivalents and restricted cash ( 41,965 ) ( 37,818 )

20 unchanged sentences

Description of Business:

is a diversified services company which, acting through its subsidiaries, has been providing professional business services since 1996, primarily to small and medium-sized businesses, as well as individuals, governmental entities, and not-for-profit enterprises throughout the United States and parts of Canada.

CBIZ, Inc., together with all of its wholly-owned subsidiaries ("CBIZ", the "Company", "we", "us", or "our"), is a diversified services company which, acting through its subsidiaries, has been providing professional business services since 1996, primarily to small and medium-sized businesses, as well as individuals, governmental entities, and not-for-profit enterprises throughout the United States and parts of Canada.

manages and reports its operations along three practice groups:

Financial Services, Benefits and Insurance Services and National Practices.

A further description of products and services offered by each of the practice groups is provided in Note 11, Segment Disclosures, to the accompanying unaudited condensed consolidated financial statements.

During the six months ended June 30, 2024, we completed the acquisitions of Erickson, Brown & Kloster, LLC ("EBK") and CompuData, Inc.

A further description of products and services offered by each of the practice groups is provided in Note 11, Segment Disclosures.

During the nine months ended September 30, 2024, we completed the acquisitions of Erickson, Brown & Kloster, LLC ("EBK") and CompuData, Inc.

("CompuData") in our Financial Services practice group and Educational & Institutional Insurance Administrator, Inc.'s EIIA Higher Education Benefit Trust ("EIIA") in our Benefits and Insurance practice group for a total aggregated purchase price of $ 40.1 million, including $ 15.2 million recorded as contingent consideration.

For the six months ended June 30, 2024, we recorded $ 12.6 million in total revenue from those acquisitions.

None of the acquisition are considered material, individually or in the aggregate.

For the nine months ended September 30, 2024, we recorded $ 21.2 million in total revenue from those acquisitions.

None of the acquisitions are considered material, individually or in the aggregate.

During the nine months ended September 30, 2024, we completed the sale of CBIZ KA Consulting Services, LLC, which was a component of our National Practice segment.

As a result of the transaction, we recorded a gain of $ 4.95 million during the three and nine months ended September 30, 2024, respectively.

The gain was recorded in "Gain on sale of operations, net" on the Consolidated Statements of Comprehensive Income.

Proceeds from the sale were classified as cash provided by investing activities from continuing operations in the Consolidated Statements of Cash Flows.

Basis of Consolidation:

The accompanying unaudited condensed consolidated financial statements include the operations of CBIZ, Inc.

and all of its wholly-owned subsidiaries (“CBIZ”, the “Company”, “we”, “us”, or “our”), after elimination of all intercompany balances and transactions.

and all of its wholly-owned subsidiaries after elimination of all intercompany balances and transactions.

These 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.

2 unchanged sentences

Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.

As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

In the opinion of CBIZ management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial condition, results of operations, and cash flows for the interim periods presented, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2024.

3 unchanged sentences

Changes in Accounting Policies:

We have consistently applied the accounting policies for the periods presented as described in Note 1, Basis of Presentation and Significant Accounting Policies, to the consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

NEW ACCOUNTING PRONOUNCEMENTS

2 unchanged sentences

We assess and review the impact of all issued ASUs.

During the six months ended June 30, 2024, 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, 2024, we have implemented all new ASUs that are in effect and that may impact our consolidated financial statements.

ACCOUNTS RECEIVABLE, NET

3 unchanged sentences

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

Accounts receivable, net, at June 30, 2024 and December 31, 2023 was as follows (in thousands):

Accounts receivable, net, at September 30, 2024 and December 31, 2023 was as follows (in thousands):

September 30,

2024 December 31,

4 unchanged sentences

Accounts receivable, net $ 476,565 $ 380,152

Changes to the allowance for doubtful accounts for the six months ended June 30, 2024 and twelve months ended December 31, 2023 were as follows (in thousands):

Changes to the allowance for doubtful accounts for the nine months ended September 30, 2024 and year ended December 31, 2023 were as follows (in thousands):

September 30,

2024 December 31,

4 unchanged sentences

DEBT AND FINANCING ARRANGEMENTS

2022 Credit Facility - Our primary financing arrangement is the 2022 credit facility.

The 2022 credit facility has a borrowing capacity of $ 600 million and provides us with the capital necessary to meet our working capital needs as well as the flexibility to continue with our strategic initiatives, including business acquisitions and share repurchases.

The 2022 credit facility matures on May 4, 2027.

The balance outstanding under the 2022 credit facility was $ 381.0 million and $ 312.4 million at June 30, 2024 and December 31, 2023, respectively.

The effective interest rates under the 2022 credit facility, including the impact of interest rate swaps associated with the 2022 credit facility, for the six months ended June 30, 2024 and 2023 were as follows:

Six Months Ended

2022 Credit Facility - As of September 30, 2024, our primary financing arrangement is the 2022 credit facility.

The 2022 credit facility, which matures on May 4, 2027, has a borrowing capacity of $ 600 million.

The balance outstanding under the 2022 credit facility was $ 337.3 million and $ 312.4 million at September 30, 2024 and December 31, 2023, respectively.

The effective interest rates under the 2022 credit facility, including the impact of interest rate swaps associated with the 2022 credit facility, for the nine months ended September 30, 2024 and 2023 were as follows:

Nine Months Ended

September 30,

Weighted average rates 5.40 % 5.16 %

1 unchanged sentence

1.93 % - 8.00 %

We had approximately $ 209.8 million of available funds under the 2022 credit facility at June 30, 2024, net of outstanding letters of credit of $ 3.2 million.

We had approximately $ 252.0 million of available funds under the 2022 credit facility at September 30, 2024, net of outstanding letters of credit of $ 3.2 million.

Available funds under the 2022 credit facility are based on a multiple of earnings before interest, taxes, depreciation and amortization as defined in the 2022 credit facility, and are reduced by letters of credit, other indebtedness and outstanding borrowings under the 2022 credit facility.

4 unchanged sentences

Our Board of Directors has discretion over the payment and level of dividends on common stock, subject to the limitations of the 2022 credit facility and applicable law.

The 2022 credit facility contains a provision that, in the event of a defined change in control, the 2022 credit facility may be terminated.

The 2022 credit facility contains a provision that, in the event of a defined change in control, the 2022 credit facility may be terminated and all amounts outstanding may become due and payable.

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, 2024, we are in compliance with all covenants.

As of September 30, 2024, we are in compliance with all covenants.

Refer to the Annual Report on Form 10-K for the year ended December 31, 2023 for further discussion on the 2022 credit facility.

The 2022 credit facility was amended and restated on November 1, 2024 in connection with the closing of the Transaction (as defined below).

Refer to Note 12, Subsequent Events, for more information.

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 did no t have a balance outstanding at June 30, 2024.

On August 1, 2024, we renewed the line of credit and it will terminate on July 31, 2025.

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, 2024 and 2023 was as follows (in thousands):

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

The line of credit did no t have a balance outstanding at September 30, 2024.

On August 1, 2024, we renewed the line of credit and it will now terminate on July 31, 2025.

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, 2024 and 2023 was as follows (in thousands):

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

2024 2023 2024 2023

3 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 $ 3.2 million and $ 3.5 million at June 30, 2024 and December 31, 2023, 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, 2024 and December 31, 2023, respectively.

The amount of license bonds outstanding was $ 2.2 million and $ 2.3 million at September 30, 2024 and December 31, 2023, respectively.

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

28 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 $ 39.7 million and $ 40.0 million at June 30, 2024 and December 31, 2023, respectively, and these investments have maturity or callable dates ranging from July 2024 through January 2026.

At June 30, 2024, 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 $ 41.0 million and $ 40.0 million at September 30, 2024 and December 31, 2023, respectively, and these investments have maturity or callable dates ranging from October 2024 through March 2027.

At September 30, 2024, 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, 2024 and the twelve months ended December 31, 2023 (in thousands):

Six Months Ended June 30, 2024 Twelve Months Ended December 31, 2023

The following table summarizes activities related to these investments for the nine months ended September 30, 2024 and the year ended December 31, 2023 (in thousands):

Nine Months Ended September 30, 2024 Year Ended December 31, 2023

Fair value at beginning of period $ 39,459 $ 43,485

5 unchanged sentences

Fair value at end of period $ 40,799 $ 39,459

In addition to the available-for-sale debt securities discussed above, we also held other depository assets in the amount of $ 1.6 million and $ 1.0 million at June 30, 2024 and December 31, 2023, respectively.

In addition to the available-for-sale debt securities discussed above, we also held other depository assets in the amount of $ 0.3 million and $ 1.0 million at September 30, 2024 and December 31, 2023, respectively.

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

2 unchanged sentences

Refer to the Annual Report on Form 10-K for the year ended December 31, 2023 for further discussion on our interest rate swaps.

The following table summarizes our outstanding interest rate swaps and their classification in the accompanying unaudited Condensed Consolidated Balance Sheets at June 30, 2024 and December 31, 2023 (amounts in thousands):

June 30, 2024

The following table summarizes our outstanding interest rate swaps and their classification in the accompanying unaudited Condensed Consolidated Balance Sheets at September 30, 2024 and December 31, 2023 (amounts in thousands):

September 30, 2024

Amount Fixed Rate Expiration Fair

14 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, 2024 and 2023 (in thousands):

Gain Recognized

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, 2024 and 2023 (in thousands):

Gain (Loss) Recognized

in AOCI, net of tax Gain Reclassified

1 unchanged sentence

Three Months Ended

June 30, Three Months Ended

September 30, Three Months Ended

September 30,

2024 2023 2024 2023

1 unchanged sentence

Gain Recognized

in AOCI, net of tax Gain (Loss) Reclassified

in AOCI, net of tax Gain Reclassified

from AOCI into Expense

Six Months Ended

June 30, Six Months Ended

Nine Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

1 unchanged sentence

FAIR VALUE MEASUREMENTS

The following table summarizes our assets and (liabilities) at June 30, 2024 and December 31, 2023, 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, 2024 December 31, 2023

Deferred compensation plan assets 1 $ 162,133 $ 143,499

The following table summarizes our assets and (liabilities) at September 30, 2024 and December 31, 2023, 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, 2024 December 31, 2023

Assets of deferred compensation plan 1 $ 165,466 $ 143,499

Available-for-sale debt securities 1 40,799 39,459

Other depository assets 1 346 1,031

Deferred compensation plan liabilities 1 ( 162,133 ) ( 143,499 )

Deferred compensation plan obligations 1 ( 165,466 ) ( 143,499 )

Interest rate swaps 2 1,279 3,999

1 unchanged sentence

Contingent purchase price liabilities 3 ( 78,002 ) ( 114,946 )

During the six months ended June 30, 2024 and 2023, 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, 2024 and 2023 (pre-tax basis, in thousands):

During the nine months ended September 30, 2024 and 2023, 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, 2024 and 2023 (pre-tax basis, in thousands):

Beginning balance – December 31 $ ( 114,946 ) $ ( 132,010 )

Additions from business acquisitions ( 15,184 ) ( 32,142 )

Contingent purchase price liabilities assumed ( 5,231 ) —

Settlement of contingent purchase price liabilities 58,468 46,209

1 unchanged sentence

Change in net present value of contingencies ( 1,625 ) ( 2,129 )

Ending balance – June 30 $ ( 83,839 ) $ ( 130,465 )

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, 2024 and 2023, respectively (in thousands):

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

Ending balance – September 30 $ ( 78,002 ) $ ( 120,014 )

During the three months ended September 30, 2024, we assumed $ 5.3 million in outstanding contingent purchase price liabilities from CBIZ CPAs P.C., a national independent Certified Public Accounting firm with which we have an existing Administrative Service Agreement.

As a result, we recorded $ 5.2 million additional expense for the three and nine months ended September 30, 2024, respectively.

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, 2024 and 2023, respectively (in thousands):

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

2024 2023 2024 2023

4 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 (loss) income for the three and six months ended June 30, 2024 and 2023 (in thousands):

The following table is a summary of other comprehensive income and discloses the tax impact of each component of other comprehensive (loss) income for the three and nine months ended September 30, 2024 and 2023 (in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

5 unchanged sentences

Total other comprehensive (loss) income $ ( 2,497 ) $ 487 $ ( 1,621 ) $ 811

(1) Net of income tax expense of $ 68 and $ 64 for the three months ended June 30, 2024 and 2023, respectively.

Net of income tax expense of $ 89 and $ 135 for the six months ended June 30, 2024 and 2023, respectively.

(2) Net of income tax benefit of $ 99 and income tax expense of $ 449 for the three months ended June 30, 2024 and 2023, respectively.

Net of income tax expense of $ 223 and income tax benefit of $ 14 for the six months ended June 30, 2024 and 2023, respectively.

(1) Net of income tax expense of $ 85 and $ 68 for the three months ended September 30, 2024 and 2023, respectively.

Net of income tax expense of $ 174 and $ 203 for the nine months ended September 30, 2024 and 2023, respectively.

(2) Net of income tax benefit of $ 903 and income tax expense of $ 108 for the three months ended September 30, 2024 and 2023, respectively.

Net of income tax benefit of $ 680 and income tax expense of $ 94 for the nine months ended September 30, 2024 and 2023, respectively.

EMPLOYEE STOCK PLANS

1 unchanged sentence

The amendment added 1.5 million shares to the total number of shares that may be issued under the 2019 Plan.

All other respects of the 2019 Plan remain unchanged.

All other aspects of the 2019 Plan remain unchanged.

The 2019 Plan, which expires in 2029, permits the grant of various forms of stock-based awards.

3 unchanged sentences

Refer to the Annual Report on Form 10-K for the year ended December 31, 2023 for further discussion on the 2019 Plan.

Compensation expense for stock-based awards recognized during the three and six months ended June 30, 2024 and 2023 was as follows (in thousands):

Compensation expense for stock-based awards recognized during the three and nine months ended September 30, 2024 and 2023 was as follows (in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

3 unchanged sentences

Total stock-based compensation expense $ 2,415 $ 3,102 $ 7,431 $ 9,721

Stock Options and Restricted Stock Units and Awards – The Company did not grant any stock options during the six months ended June 30, 2024.

The following table presents our restricted stock units and awards activity during the six months ended June 30, 2024 (in thousands, except per share data):

Restricted Stock Units and Awards

Stock Options and Restricted Stock Units and Awards – The Company did not grant any stock options during the nine months ended September 30, 2024.

The following table presents our restricted stock units and awards activity during the nine months ended September 30, 2024 (in thousands, except per share data):

Stock Options Restricted Stock Units and Awards

Options Weighted Average Exercise Price

Shares Weighted Average

4 unchanged sentences

Expired or canceled — $ — ( 3 ) $ 38.52

Outstanding at June 30, 2024 189 $ 56.04

Exercisable at June 30, 2024 189 $ 56.04

Outstanding at September 30, 2024 150 $ 35.22 187 $ 56.69

Exercisable at September 30, 2024 150 $ 35.22 187 $ 56.69

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

4 unchanged sentences

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, 2024 (in thousands, except per share data):

The following table presents our PSUs activity during the nine months ended September 30, 2024 (in thousands, except per share data):

Share Units Weighted

3 unchanged sentences

Canceled ( 7 ) $ 39.09

Outstanding at June 30, 2024 254 $ 49.42

Outstanding at September 30, 2024 254 $ 49.42

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

1 unchanged sentence

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, 2024 and 2023 (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, 2024 and 2023 (in thousands, except per share data):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

11 unchanged sentences

Diluted earnings per share $ 0.70 $ 0.67 $ 2.62 $ 2.64

(1) A total of 9 thousand and 96 thousand shares of stock-based awards were excluded from the calculation of diluted earnings per share for three and six months ended June 30, 2024, respectively, as their effect would be anti-dilutive.

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.

(1) A total of 8 thousand and 49 thousand shares of stock-based awards were excluded from the calculation of diluted earnings per share for three and nine months ended September 30, 2024, respectively, as their effect would be anti-dilutive.

A total of 60 thousand shares of stock-based awards were excluded from the calculation of diluted earnings per share for the nine months ended September 30, 2023, 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 , 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.

(3) The denominator used in calculating diluted earnings per share did not include 254 thousand PSUs for both the three and six months ended June 30, 2024.

T he 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.The performance conditions associated with these PSUs were not met and consequently none of these PSUs were considered as issuable for the three and six months ended June 30, 2024 and 2023.

(3) The denominator used in calculating diluted earnings per share did not include 158 thousand PSUs for both the three and nine months ended September 30, 2024.

T he 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.The performance conditions associated with these PSUs were not met and consequently none of these PSUs were considered as issuable for the three and nine months ended September 30, 2024 and 2023.

SEGMENT DISCLOSURES

17 unchanged sentences

Upon consolidation, intercompany accounts and transactions are eliminated, thus inter-segment revenue is not included in the measure of profit or loss for the practice groups.

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, 2024 and 2023 is presented below.

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

Segment information for the three and nine months ended September 30, 2024 and 2023 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, 2024

Three Months Ended September 30, 2024

Services Benefits and

7 unchanged sentences

Total revenue $ 322,295 $ 104,040 $ 12,549 $ 438,884

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

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Services Benefits and

7 unchanged sentences

Total revenue $ 1,004,158 $ 309,867 $ 39,168 $ 1,353,193

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

Segment information for the three months ended June 30, 2024 and 2023 was as follows (in thousands):

Three Months Ended June 30, 2024

Segment information for the three months ended September 30, 2024 and 2023 was as follows (in thousands):

Three Months Ended September 30, 2024

Services Benefits

8 unchanged sentences

Interest expense — ( 3 ) — ( 4,965 ) ( 4,968 )

Gain on sale of operations, net — — 4,953 — 4,953

Other income, net 15 5 — 1,280 1,300

1 unchanged sentence

Income (loss) before income tax expense $ 61,671 $ 21,077 $ 6,401 $ ( 38,178 ) $ 50,971

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Services Benefits

8 unchanged sentences

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

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

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

1 unchanged sentence

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

Segment information for the six months ended June 30, 2024 and 2023 was as follows (in thousands):

Six Months Ended June 30, 2024

Segment information for the nine months ended September 30, 2024 and 2023 was as follows (in thousands):

Nine Months Ended September 30, 2024

Services Benefits

8 unchanged sentences

Interest expense — ( 3 ) — ( 15,360 ) ( 15,363 )

Gain on sale of operations, net — — 4,953 — 4,953

Other income, net 229 92 ( 4 ) 12,890 13,207

1 unchanged sentence

Income (loss) before income tax expense $ 215,378 $ 60,111 $ 9,055 $ ( 101,366 ) $ 183,178

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Services Benefits

2 unchanged sentences

Revenue $ 932,388 $ 296,179 $ 35,080 $ — $ 1,263,647

Operating expenses (income) 487,888 155,297 21,128 20,685 684,998

Operating expenses 737,568 234,933 31,795 22,850 1,027,146

Gross margin 194,820 61,246 3,285 ( 22,850 ) 236,501

4 unchanged sentences

Gain on sale of operations, net 176 — — — 176

Other income (expense), net 490 330 1 9,712 10,533

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

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

1 unchanged sentence

SUBSEQUENT EVENTS

On July 30, 2024, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Marcum LLP, a New York registered limited liability partnership (“Marcum”), Marcum Advisory Group LLC, a Delaware limited liability company and wholly owned subsidiary of Marcum (“MAG”), PMMS LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company (“Merger Sub”), and Marcum Partners SPV LLC, a Delaware limited liability company.

Under the terms of the Merger Agreement, Merger Sub will merge with and into MAG, with MAG continuing as the surviving entity and as a wholly owned subsidiary of the Company (the “Merger”).

Prior to the closing of the Merger, Marcum will contribute substantially all of its non-attest business assets to MAG and MAG will assume substantially all of Marcum’s liabilities, in each case subject to certain exclusions.

In a separate transaction, Mayer Hoffman McCann P.C., a national independent Certified Public Accounting firm with which the Company has an existing Administrative Service Agreement, will purchase from Marcum substantially all of Marcum’s attest business assets (the “Attest Purchase”).

The Merger and the transactions contemplated by the Merger Agreement are referred to herein as the “Transaction.” Subject to the satisfaction of the conditions described below and other customary closing conditions, the Transaction is expected to close in the fourth quarter of 2024.

The aggregate consideration to be paid by the Company in connection with the Transaction is approximately $ 2.3 billion, on a cash-free and debt-free basis and subject to calculation and adjustments as provided in the Merger Agreement, of which approximately $ 1.1 billion is expected to be paid in cash and the remainder is expected to be paid in approximately 14.4 million shares of the Company's Common Stock, par value $ 0.01 per share (the "Common Stock") (based on $ 76.84 per share as specified in the Merger Agreement, which was the 30-day volume weighted average price of our Common Stock as of three business days prior to the date of the Merger Agreement.

The consideration payable in shares of common stock (the “Shares”) will be delivered as follows:

(i) approximately 5 % of the Shares will be subject to continued service requirements and, subject to satisfaction of those requirements, be delivered on the fourth anniversary of the closing (“performance shares”);

(ii) excluding those performance shares, approximately 25 % of the Shares will be delivered on the later of three business days following closing and January 2, 2025;

and (iii) the remaining approximately 75 % of the Shares, excluding performance shares, will be delivered in 36 monthly installments after the initial delivery.

The Shares, once fully issued, will constitute approximately 22 % of the Company's outstanding shares, without giving effect to any subsequent issuances, repurchases or other changes in the number of shares outstanding.

Each of the Company, Merger Sub, Marcum and MAG has provided customary representations, warranties and covenants in the Merger Agreement.

The completion of the Merger is subject to various closing conditions, including, among others, (a) the expiration of all waiting periods and receipt of all approvals required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976;

(b) the Company obtaining stockholder approval of the issuance of the Shares in connection with the Transaction as required by the rules of the New York Stock Exchange;

(d) the Company obtaining debt financing as contemplated by the commitment letter described below;

and (e) the completion of the Attest Purchase.

The Merger Agreement contains customary termination rights for both the Company and Marcum.

Both the Company and Marcum have the right to terminate the Merger Agreement if the Transaction is not consummated on or prior to May 1, 2025, subject to certain exceptions.

In the case of certain terminations under the circumstances described in the Merger Agreement, the Company may be required to pay a termination fee to Marcum of $ 48.0 million if debt financing is not obtained or $ 25.0 million if approval of the Company’s stockholders is not obtained or the Company’s board changes its recommendation with respect to the Transaction.

Marcum may be required to pay a termination fee to the Company of $ 22.0 million if the requisite approval of Marcum partners is not obtained within the time period specified in the Merger Agreement.

The Company has obtained committed financing to, among other things, fund the cash portion of the purchase price pursuant to a commitment letter (the “Commitment Letter”) entered into on July 30, 2024, with Bank of America, N.A.

and BofA Securities, Inc., which provides commitments for senior secured credit facilities (the “Senior Credit Facilities”) in an aggregate principal amount of $ 2.0 billion, consisting of (x) a $ 600 million five year senior secured revolving credit facility and (y) a $ 1.4 billion five year senior secured term loan facility.

The funding of the Senior Credit Facilities is contingent on the satisfaction of customary conditions, including (i) execution and delivery of definitive documentation with

respect to the Senior Credit Facilities in accordance with the terms set forth in the Commitment Letter and (ii) consummation of the acquisition of Marcum.

Business Combinations:

As previously disclosed, on July 30, 2024, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Marcum LLP, a New York registered limited liability partnership (“Marcum”), Marcum Advisory Group LLC, a Delaware limited liability company and wholly owned subsidiary of Marcum (“MAG”), PMMS LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company (“Merger Sub”), and Marcum Partners SPV LLC, a Delaware limited liability company (the “Owner Representative”).

Under the terms of the Merger Agreement, at the closing, Merger Sub merged with and into MAG, with MAG continuing as the surviving entity and as a wholly owned subsidiary of the Company (the “Merger”).

Prior to the closing of the Merger, Marcum contributed substantially all of its non-attest business assets to MAG, subject to certain exclusions, and MAG assumed certain Marcum liabilities.

In a separate transaction, CBIZ CPAs P.C., previously known as Mayer Hoffman McCann P.C., a national independent certified public accounting firm with which the Company has an existing Administrative Services Agreement, purchased from Marcum substantially all of Marcum’s attest business assets, subject to certain exclusions ("Attest Purchase").

The Merger and the transactions contemplated by the Merger Agreement are referred to herein as the “Transaction.”

On November 1, 2024, the Transaction was completed.

At closing, we paid $ 637.6 million in cash as consideration to Marcum partners (including escrowed amounts) and an additional $ 425.5 million in cash to satisfy certain obligations of Marcum and for certain other specified closing payments as provided by the Merger Agreement.

The cash portion of the purchase price paid to Marcum partners is subject to customary post-closing adjustments and escrow arrangements.

In addition to the cash consideration, we will issue a total of 14,260,645 shares of our common stock (the “Shares”) to Marcum partners.

The Shares will be delivered as follows:

(i) 713,032 Shares will be subject to continued service requirements and, subject to satisfaction of those requirements, be delivered on the fourth anniversary of the closing;

(ii) 2,852,129 Shares will be delivered on January 2, 2025;

and (iii) the remaining 10,695,484 Shares will be delivered in 36 monthly installments commencing on January 2, 2025.

We have yet to finalize the purchase price allocation for the Transaction, and are in the process of evaluating the effect that the Transaction will have on our consolidated financial statements.

Amended and Restated Credit Facilities

On November 1, 2024, the Company and CBIZ Operations, Inc., a wholly owned subsidiary of the Company, as the borrower (“CBIZ Operations”), Bank of America, N.A., as administrative agent, and the other financial institutions party thereto entered into an amended and restated credit agreement (the “2024 Credit Facilities”) providing for $ 2.0 billion in senior secured credit facilities, consisting of a $ 1.4 billion term loan (the “Term Loan”) and $ 600.0 million revolving credit facility (the “Revolving Credit Facility”).

The 2024 Credit Facilities amend and restate the 2022 credit facility.

The proceeds of the Term Loan were used to pay the cash consideration and make certain other payments in connection with the closing of the Transaction and to repay outstanding amounts under the 2022 credit facility.

The 2024 Credit Facilities mature on November 1, 2029.

The Term Loan provides for scheduled annual principal amortization payments of 5 % in the first two years following closing, 7.5 % annually in the third and fourth year following closing and 10 % in the fifth year following closing, with the balance due at maturity.

The commitments under the 2024 Credit Facilities may be increased in the form of incremental term facilities and/or increased commitments under the Revolving Credit Facility in an aggregate principal amount of up to the sum of (a) the greater of (i) $ 465.0 million and (ii) 100 % of EBITDA, plus (b) an unlimited amount, so long as Total Net Leverage Ratio (“TNLR”) is no more than the lesser of 3.50 to 1.00 and TNLR at the closing after giving pro forma effect to the Transaction.

The Company may elect an interest rate for the Term Loan and the Revolving Credit Facility based on the Base Rate or Term SOFR, plus an applicable spread.

The Base Rate option is the highest of:

(i) the Bank of America prime rate;

(ii) the federal funds rate plus 0.50 % ;

or (iii) Term SOFR plus 1.0 % .

Term SOFR is the forward-looking term rate based on the secured overnight financing rate that is published by CME Group Benchmark Administration Limited (or a successor administrator of such rate) plus a 0.10 % SOFR Adjustment.

The applicable spreads under the 2024 Credit Facilities will be 0.375 % to 1.50 % and 1.375 % to 2.50 % above the Base Rate and Term SOFR, respectively.

The 2024 Credit Facilities include a financial covenant requiring that TNLR not exceed 5.00 to 1.00 initially, stepping down in increments to 3.75 to 1.00 during and after the seventh fiscal quarter after the closing (with a limited ability to temporarily increase in connection with material acquisitions

commencing in the sixth fiscal quarter after the closing).

The 2024 Credit Facilities also require a Minimum Consolidated Interest Coverage Ratio of 3.00 to 1.00 and affirmative and negative covenants that are in each case generally similar to those contained in the 2022 credit facility, but with

increases to certain baskets and caps and certain other exceptions.

The 2024 Credit Facilities are guaranteed by the Company and each of its domestic subsidiaries, subject to certain exceptions (the “Guarantors”), and are secured by substantially all assets of the Company, CBIZ Operations and the other Guarantors.

As of November 1, 2024, t he balance outstanding under the 2024 Credit Facilities was $ 1,465.5 million .

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