Good morning, and welcome to the CBIZ First Quarter 2014 Results Conference Call. [Operator Instructions] Please also note, this event is being recorded. I would now like to turn the conference over to Mr. Steve Gerard. Please go ahead.

Thank you, Maureen. Good morning, everyone, and thank you for calling in to our first quarter conference call. Before I begin my comments, I'd like to remind you of a few things. As with all our conference calls, this call is intended to answer the questions of our shareholders and analysts. If there are media representatives on the call, you're welcome to listen in. However, I ask that if you have a question, you hold them for after the call and we'd be happy to address them at that time. This call is also being webcast and you can access it over our website at www.cbiz.com. You should have all received a copy of the release that we issued this morning. If you did not, you can access that on our website as well. Finally, please remember that during the course of the call, we may make forward-looking statements. These statements represent management's intentions, hopes, beliefs, expectations and predictions of the future. Actual results can and sometimes do differ materially from those projected in forward-looking statements. Additional information concerning the factors that could cause actual results to differ materially from those in the forward-looking statements is contained in our SEC filings, Form 10-K and press releases. Joining me on the call this morning is Jerry Grisko, our President and Chief Operating Officer; and Ware Grove, our Chief Executive Officer. Prior to the opening this morning, we were pleased to announce our first quarter results. And while the pacing of our revenue was a bit slower than we had expected, the fact is that we actually reported growth in revenue, growth in our income from continuing operations, growth from -- and growth in pretax income. And as Ware will explain in a minute, when you adjust the share count for the impact of the converts, an increase in our earnings per share. So with that, process, let me turn it over to Ware to give you the details and then I'll come back and talk a little bit about what we're seeing in the market.

Thank you, Steve, and good morning, everyone. As is our normal practice, I want to take a few minutes to run through the highlights of the first quarter numbers we've released this morning. As we get started, I want to remind everyone that numbers from the first quarter of 2013 are restated to reflect the sale of our MMP operation, which occurred in August of 2013. And for your reference, I would direct you to Footnote 21 in our recently filed 10-K report for 2013, where you will find a restatement for each quarter for both 2012 and 2013. Now turning to the results we announced this morning. We're pleased to report that total revenue increased by 3.8% or by $7.7 million in the first quarter of 2014 compared with prior year. Revenue grew at a slower pace than we expected for several reasons that we can comment about later, but this translated into a 5% increase in net income after tax for the first quarter, so we're happy to leverage this revenue growth. Same-unit revenue grew by 1.4% in the first quarter and acquisition-related revenue contributed an additional $4.8 million to revenue growth in the first quarter. Our total revenue in our Financial Services group increased by 3.2% with same-unit revenue increasing by 1.2% in the first quarter compared with the first quarter a year ago. Revenue growth was slower than anticipated due to a large number of weather related office closures that impacted revenue on our Financial Services group by approximately $1 million during our busy season. This client work still needs to be done, but bear in mind that our staff is already working at full capacity during much of the first quarter. So, not unlike what occurred in the first half of last year, this revenue…

Thank you, Ware. Let me just generally comment on the market as we see it. Our client base, I would categorize as basically stable. They continue to be cautious, but are feeling better about their role in the economy. They are beginning to -- they are continuing to look to expand, albeit at a slow pace. And as I've said in prior conference calls, the climb out of the historical economic downturn for small to mid-sized companies will be a slow climb, but we're seeing nothing in the marketplace affecting our clients today that has changed that cautious but somewhat growing environment. On the acquisition front, we've completed 3 acquisitions this year. We typically target 3 to 6. I'm highly confident that we will make or exceed that mark in 2014. So the acquisition pipeline remains strong in both our Employee Services group and our Financial Services group with respect opportunities that we may have down the road. With that, let me stop and take questions from our shareholders and analysts.

[Operator Instructions] Our first question comes from Josh Vogel of Sidoti & Company.

Given your guidance, especially revenue that you reiterated for the full year, I was curious what same-unit sales growth is implied in this guidance and, outside of additional acquisitions, what would get you to the high end of the range?

Josh, implied in the -- the Employee Services is in line with our expectation. We're pretty soft in the first quarter on Financial Services. So when you combine the two, we're expecting organic growth in the 3% to 3.5% range this year -- for the full year.

And the other half of your question, Josh, to get to the top of the range of guidance, it would have to come from acquisitions, that would be the other piece of it. The real issue for us is getting that organic growth rate in the target area that we're on.

Okay. And in same-unit sales, obviously, a little bit softer than expected in Q1. And I was just surprised because you're going up against pretty favorable comp with the deferred revenue last year. So was there anything else besides weather-related closures and the timing of the government contracts that we should be aware of?

No. I don't think there's anything specific that we were -- that affected the first quarter. And obviously, had we not had those 2 events, that incremental $2.6 million, most of which drops to the bottom line, by the way, would have changed the picture significantly. But there was nothing else specific in the quarter of any magnitude. There's always little bits and pieces here and there, but nothing significant.

Okay. And have you thought about refinancing the convert and the timing with regard to that and what impact that could have on earnings, and would you maybe finance with a new convert or with bank debt?

We are actively involved in considering a number of things with respect to the eventual refinance of the convert. If the convert is due September of next year, it is our intent at this time not to finance it with another convert. So we are looking at the market to determine whether the best opportunity might be a bank transaction, a private placement or some combination of instruments. We hope to have clarity on some of it by the end of third quarter this year, so we're well-positioned for next year. Given the fact that we can't really buy them all in right now and quite frankly, the premium would make it prohibitive, taking them out at this time doesn't -- isn't an option for us, but we will be well-prepared by end of third quarter to talk about our abilities to refinance.

Okay, great. And just 2 more quick ones. How big is the government consulting business today? On an annual basis?

It's about $100 million when you consider the federal and the state business where we are the dominant firm providing Medicaid Advisory and consulting services to what is now 48 of the 50 states, as well as the CMS. And the particular contracts that were scaled back were federal government contracts, but the pipeline is where I commented in that business is very, very strong and we have a high confidence level that we'll be able to make up that shortfall this year.

Okay. And just lastly, I think I missed it, but did you see what the same-unit sales growth was in Employee Services?

Yes, Josh, 2.5% in the first quarter.

Our next question comes from Jim MacDonald from First Analysis.

So just to make sure I'm clear, your EPS guidance for the year is, assuming $50 million approximately or a little bit less than share count not -- so it's excluding the impact of these diluted shares?

That is right, Jim.

Okay. And maybe you can walk us through a little bit. So you had 50 million shares in June last year, you bought back the shares in the third quarter 3.9, but you added back the 3.1 this quarter, but we're up to 52.6 million shares. So there must be something else going on there?

Well, Jim, there are shares that are issued in each of our acquisitions and there are shares issued for equity grants. So that would make up the difference.

As well as the impact of the buybacks, last year and this year.

Okay. And just following up on Josh's question on the government healthcare [ph], I believe it grew very quickly last year. You talked about 3.2% growth this quarter, which is below your expectations. I may be wrong, but I think it grew close to double digits or maybe did grow double digits last year. What kind of growth do you expect this year for the government consulting business and is that -- how long can that -- is that impacted by the ACA? Or how long can that continue?

Yes, we had -- I think the growth last year, organically, was in the high single digits. And as this business continues to grow, Jim, just because of the large numbers, the growth rate might slow a little bit. But 3.2% is below our goal for the year. So we're looking for something in the mid to the higher single digits this year, as opposed to the 3.2%.

And longer term, Jim, we think the Affordable Care Act is a plus for this business because this business is primarily focused on Medicaid at the state level, which turns out to be the economic conduit for the Affordable Care -- part of the conduit for the Affordable Care Act. So while there's pressure for state funding just like there's pressure for federal funding, long term, we don't think the Affordable Care Act is a negative. We think it's a positive in this business. And as Ware says, our target for this business growth for this year and, quite frankly, for future years is in the high-single digits.

So you're helped by increased enrollments in Medicaid directly?

Well, not only increased enrollments in Medicaid, but it's the restructuring of the Medicaid programs at the state level and the auditing of those programs at the local level. So we do consultative work for the states and we do the audit and follow-up work. And each state has multiple programs. So we may be in a state doing some programs and somebody else may be doing other programs. So it's really a combination of things. In addition to which, we are also a reasonably significant provider of consultive services and audit services for that CMS as well.

Yes. Thinking about that, so of the $2.6 million that's deferred, I'd expect most of the $1 million in the traditional business to come in, in the second quarter. How about other $1.6 million from scope changes? Is that kind of over the rest of the year?

I would look at it this way, Jim. The delayed work on the weather-related office closings will come -- we expect it to come in second and third quarter. The scope changes in the federal governments, that business doesn't come back but the pipeline in that business is strong enough to make up for that shortfall. And that should be phased in over the year.

Okay. And on the other side of the ACA, so can we talk about any further impact of the ACA on your health brokerage business?

No. We can talk about it because there's been very little impact -- negative impact on that business. The numbers reported by Ware this morning for our Employee Benefits business is up year-over-year. We're not seeing any significant amount of our clients migrating or moving their employees off to the exchanges and to the extent that we're involved, and they do move it, but there's a commission paid there anyway. So in terms of assessing a negative impact, we're not seeing any significant impact from the carriers. To the extent there has been impact that's been on small group, which is not our predominant business. So we're -- we think there may be some more opportunity coming out of the Affordable Care Act because, as you know, the target date was moved another year to the end of this year, so we did have some clients and prospective clients put off final decisions. So we're full out in that business and I don't -- I'm not seeing any real negative impact. In fact, it was very encouraging in our Employee Services business to see that our 4 largest businesses in that group were actually up quarter-over-quarter.

So where do you see migration due to the Affordable Care Act to more self-insured options or -- and somewhat to the exchanges in the...

Well, we're seeing a couple of things. We're certainly seeing a shift in the planned design where more and more companies are putting in high deductible plans, which are the cheapest plans for the employee. In part, that's a cost shift to them because if there is any incident, employees are going to pick up a bigger piece of it. But we're seeing that as a trend across-the-board. More and more small companies are in fact looking at self-insurance. I can't say we've seen a big migration in that direction, but they're certainly looking at it. But when you look at our client base and the bulk of our revenue comes from the larger -- the 100 life and over our larger clients, there's been very little migration there to exchanges. The companies that have moved employees to exchanges have been really -- for the most part, they're really small companies. So we're watching it very closely. We look at it, quite frankly, every month. We're not seeing any significant negative trend at this point.

[Operator Instructions] And this concludes our question-and-answer session. I would like to turn the conference back over to Mr. Steve Gerard for any closing remarks. Please go ahead.

Thank you, Maureen. To our shareholder and analysts, again, thank you for your continued support. As we indicated, the pacing of the revenue wasn't quite what we expected, but we do believe that we're in good shape to make it up for our Associates across the country. Thanks to your hard work in the first quarter and for all of those that stood up with the storms and the weather conditions and were able to contribute, you have my thanks. And I look forward to updating everybody after the second quarter. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.