Good morning, and welcome to the CBIZ Fourth Quarter and Full Year 2015 Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Lori Novickis, Director of Corporate Relations. Please go ahead.

Thank you, Carrie. Good morning, everyone. And thank you for dialing in to the CBIZ fourth quarter and full year 2015 results conference call. Before our management team begins their presentation, I would like to remind you of a few items. As with all of our conference calls, this call is intended to answer the questions of our shareholders and analysts. If there are media representatives on the call, you’re welcome to listen in. However, we ask that if you do have questions that you hold them for after the call and we’ll be happy to address them then. This call is also being webcast. You can access the live webcast, as well as the replay on our website at www.cbiz.com. You should have all received a copy of the press release that was issued earlier this morning, if you didn’t, you can also find that on our website. Finally, remember that during the course of the call, management 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 factors that could cause actual results to differ materially from those in forward-looking statements is contained in our SEC filings, Form 10-K and press releases. Joining us for today’s call are Steve Gerard, Chairman and CEO; Jerry Grisko, President and Chief Operating Officer; and Ware Grove, our Chief Financial Officer. I will now turn the call over to Steve Gerard for his opening remarks. Steve?

Thank you, Lori, and good morning, everyone. Thank you for calling in and listening to our conference call today. Prior to the opening, we were pleased to release our fourth quarter and full 2015 results. And once again we were successful in posting gains in revenue, gains in earnings, gains in earnings per share and gains in EBITDA. So we view 2015 although the economy wasn’t quite as strong as we originally thought it was going to be as a very successful year for CBIZ, and continuing our track record of growth in each of our key areas. Before I continue my comments, let me turn this over to Ware, will walk you through the details of today’s release.

Thanks Steve, and good morning, everyone. As I normally do, I want to run through the highlights of the numbers we released this morning, for the fourth quarter and the year ended December 31, 2015. As a reminder, the numbers for 2014 include the results of the Miami office that was sold in the fourth quarter of 2014. With $5.4 million in revenue related to the Miami office during 2014, the year-over-year revenue comparisons reported for 2015 are adjusted to eliminate this from the 2014 numbers. In addition, there are share equivalence related to the accounting for the convertible note that are included in the fully diluted share count for both 2014 and for 2015. As you know, the convertible notes matured on October 1, 2015 and these notes are no longer outstanding. So as we have done in the past adjustments can be made to eliminate the impact of share equivalents on reported earnings per share. And I will comment on these adjustments as we go through the results announced earlier this morning. Thanks to the many CBIZ associates who are working hard to serve our clients across the United States. We are very pleased to report a year of revenue growth and expanding margins. Total revenue increased by 5% in the fourth quarter, and increased by 5.1% for the full year 2015 compared with the prior year. In margin on pretax income for the full year 2015 increased by 70 basis points. Within our Financial Services Group, same-unit organic revenue growth increased by 6.2% in the fourth quarter and increased by 3.4% for the full year. Within this group, the government healthcare consulting business continue to grow at high single-digit rates. This represents a highly recurring source of revenue and growth for us. We continue to successfully serve…

Thank you, Ware. I’d like to comment first on our 2015 acquisition program. Typically we focus on trying to close at least three to five transactions each year, sometimes we’ve been successful in more. 2015 turned out to be a year, we’re at the low end of that range. I want to reiterate that our pipeline remains strong, acquisitions are always opportunistic. We remain very focused and disciplined on the kind of companies we’d like to acquire and I don’t want there to be a feeling that for some reason the acquisition program dried up [indiscernible] we have anything to do with the finance of the convertible bonds. The fact of the matters, we have enormous dry powder under our revolving credit. We have a very strong pipeline. And I think that the 2016 acquisition program should be much stronger than it turned out in 2015. What I’d like to do now is depart a bit from our normal procedure. 18 months ago we announced our CEO succession plan. We will be making a change in three weeks, I view that the succession plan has been one of our most successful initiatives, as the company continues to grow and build. So what I’d like to do is, I’d like to stop talking, I’d like to introduce Jerry Grisko who most of you know already, who is our President and Chief Operating Officer. Jerry will be assuming the CEO role in three weeks. I like Jerry to give you his view on the current state of CBIZ and the 2016 plans.

Thank you, Steve, hello everybody, as we’re mentioned we experienced nice growth in 2015 in a number of our service lines, including government healthcare, our property and casualty group, in our payroll services. In addition, we made significant investments in our core accounting group, in lateral hire, senior level lateral hires, as well as our business development professionals had historic sales years. With that by the way, a backdrop and assuming that these general economic conditions in 2016 are consistent with what we saw in 2015. We would expect the growth trends to continue and to be able to generate new revenue from the lateral hires that we brought on last year and for the historic growth rates in our experience by our business development managers to continue into 2016. In addition, as Steve mentioned, we have a nice pipeline of acquisition candidates and we would expect that our activity in our goal of closing three to five transactions would continue into 2016. And while no one can predict with certainty which of those client transactions will actually be completed, a number of those transactions in the pipeline are faster growing and have higher margins than some of our core businesses. So we’re enthusiastic about that. Before I turn it back over to Steve, as Steve mentioned, this will be his last call as the CEO, I did. Just want to take a moment to recognize some of his many contributions. Under Steve’s leadership, he stated strategic course that resulted in CBIZ being a company uniquely positioned to serve our clients in a way that no competitor can match. As a result, we are able to deliver returns to shareholders of over 10 times, since the date of his arrival. Our stock is outperformed in Russell 2000 by over four times. And most importantly, we established a culture admired by all, as evidenced by our recent ranking by Forbes magazine is a number one Best Place to Work, within our industry and similar recognitions is best places to work within 18 to 20 of our markets in the past 12 months. So with that, I just want to thank Steve for his vision, his leadership and all the guidance he has given us. I will turn that back to Steve.

Thanks Jerry. At this point, I’d like to open it up for questions from our shareholders and analysts.

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Jim MacDonald of First Analysis. Please go ahead.

Yes, good morning, guys and congratulations, I guess to both Steve and Jerry. Just want to get your view on how the economy played into your guidance, strong growth in financial services this quarter. Can it continue and I’ll come back with one more after that.

So, Jim, it’s Jerry. We believe that the – 20 years, I indicated, I think 2016 is going to be much like 2015. So it did play significantly into our guidance on the future. Having said that, as I indicated we’ve experienced really nice growth in some of the service lines embedded within the two core practice groups. We had historic revenue production within our business development group on the accounting side as well as on the benefits and insurance side. So there are some very positive trends within the company. But if we are subject to the overall general economic conditions and that’s what we’re – we’re kind of mindful of when we set that guidance.

Okay, Jim, let me add, while I think, I agree with Jerry that 2016 should be a year – we have expected very much the year of growth. Don’t look into the fourth quarter financial services increased as something that is necessarily a predictor of every quarter going through 2016. The reason we don’t guide by quarter is that, in any, each of our businesses in any given quarter things can be up and down. So we’re comfortable with how we came out of 2015, we think 2016 will be better. But don’t extrapolate the fourth quarter on the financial services side.

Okay. I figured as much, but switch into Employee Services, I think I kind of missed what the same-store was for the quarter was – maybe that was flat, I guess. And maybe you could talk a little bit about – I guess you had good production on the benefits, brokerage side, but maybe you can talk a little bit more about if anything, there’s been a lot of changes in the competitive landscape on benefits brokerage and if any of that’s impacting you?

Yes, hi Jim, this is Ware. Yes, as I said the benefits piece of the business is kind of relatively flat in recent years. We’ve seen some, the carriers whirl back the carrier overrides in contingent payments. And also just because as our broker position needs to align with the best interest of clients. We place business where it best suits the client and sometimes that may be to our detriment with respect to carrier payments. And so we’ve seen a little falloff in the carrier payments. We’ve also seen some headwinds as the migration towards lower cost, qualify high deductible plans continues. And so forth, but, and we’ve seen some migration, not necessarily service related to CBIZ, but some termination of a couple of larger accounts earlier in the year that had an impact in our growth in 2015. But I also commented that our producer group has been doing an outstanding job and is in the top decile when you compare to our competitors in terms the amount of new business they generate each year. And they did so again in 2015. So aside from the pressures, I think we’re well positioned in that business and hopefully that addresses your question.

Yes, that’s helpful. And then, I’ll just ask a guidance question and get back in the queue. So does your guidance include more acquisitions than you’ve already done in terms of the revenue growth and the EPS?

Yes, Jim, we historically do not include future acquisitions in guidance because the fluid nature and you never know of something is going to close until it actually closes. But we also, and we typically have included only those acquisitions that have been closed to-date by the time the earnings release and the guidance is issued. But at this point in time, we have a fairly active acquisition pipeline. We’ve been working on a number of acquisitions, so we think are highly likely and very probable that may close highly likely close within the next 30 to 60 days, so there is some element of those in there. And we’ve kind of decided that rather than come back to you with a change in guidance at that point in time, we have some level of growth baked into the 2016 numbers based on our assessment that, a couple of these acquisitions that are forecasted within the next 30 days are highly likely.

And let me just ask a technical question, why I got you. So the interest expense was down substantially, is that sort of the level to expect given about the $200 million, $205 million in debt that you have now or it will even go lower than what we saw this quarter?

Yes, I think it’s going to go a little lower, but you never know based on our spending for acquisitions and share repurchases. So we never baked that into it but with another $50 million of cash flow and I gave you the outflow for acquisitions and capital spending, we expect that the debt levels will remain relatively constant throughout the year. There are current incremental borrowing rate is LIBOR plus 150 to 175 so our all in borrowing rate is now closer to 3%. And so as we in 2015, we had a good portion of the year with the borrowings outstanding on the convertible note and that interest rate was being approved at 7.5%. So, yes, we are going to see I think a reduction in 2016, compared to 2015.

And just remind me what your debt, what your approved debt limit is and then maybe what the available debt limit is?

Yes, we have a covenant in there that limits us to 3.75 times the underlying EBITDA. The underlying EBITDA includes the pro forma EBITDA of any acquisition. So it’s not exactly synced up with our GAAP reported EBITDA. So we have an excess of $100 million available today and as we make additional acquisitions, that capacity increases with the acquired EBITDA.

Okay, great. Thanks very much.

[Operator Instructions] Our next question comes from Steve McManus of Sidoti & Company LLC. Please go ahead.

Hey, guys thanks for taking my questions and Steve and Jerry best of luck with the transition.

Thank you.

So I guess, the first question just taking a look at the fourth quarter usually one of the harder ones to predict and impact by a lot of seasonality. What are some of the most significant drivers or factors that impacted profitability in this quarter and maybe how things you typically track, I guess for us looking out?

Yes, hey, thanks Steve. This is Ware again and we’ll just remind you that there is a reason, we don’t guide quarter-to-quarter, because there is some volatility. And sometimes the pace of project work in the second half is unpredictable and we ourselves don’t get overly concerned with one quarter versus another and we would encourage you to take a similar approach, having said that, I understand your question. So in the fourth quarter it typically on the cost side, there may be some true-ups of accruals and estimates that have been kind of running through the year. So that may be present some volatility on the cost side. And of course on the revenue side, this has been kind of year-end carrier bonuses get recognized, if they’re earned. And project work may come and go and some of it spills into the next year. Some of it gets recorded in the current year. So it’s pretty unpredictable, I wouldn’t lend again, I’ll just remind you don’t lend too much weight on the third or the fourth quarter in terms of the volatility and the earnings in those years. But we would encourage you to kind of look at the full year accomplishments against our full year guidance for 2016.

Okay. Great, that’s very helpful. And then, with respect to the project based work, any new developments with respect to the pipeline there?

No. In the fourth quarter, so are – the same kind of project work we’ve seen before, there isn’t anything specific in the last half of the year that would suggest a direction for next year. I think that’s why Jerry is indicating that, we’re kind of expecting 2016 to look a lot like 2015.

Okay. And then looking at the EBITDA guidance, the midpoint would suggest that – 10 basis points expansion in the EBITDA margin. Anything impacting the margins there that we should be aware of, is that mainly due to the kind of ramp up investments adding the resources there or anything else?

Yes, Steve, great question. Clearly some of the margin improvement that we’re going to get, we think we’re going to get in 2016 comes from the lower interest expense. But there is also a portion of margin improvement that will come from just the operating leverage and continued G&A leverage in other items. So there is clearly, as you look at the EBITDA margin you have to eliminate the impact of the interest reduction. But we should get some form of operating margin improvement beyond that.

Okay, and then just getting back to the share count. Obviously, you provided the full year estimate of 53.3. When we’re looking just into 1Q, where do you think that’s going to fall?

I don’t know off the top of my head Steve. As you know the share count is price sensitive, it’s sensitive to option exercises in a number of variables that we tend not to predict. So we’re just, I don’t know what the answer to that is, it’s probably not too far off the full year estimate by the way.

Okay.

So if I were you, I’d encourage you to use that number for each of the quarters throughout.

Yes, it is also going to be a function of our repurchase activity over the quarter and we’re not in a position to know at this point what that’s likely to be either.

Okay, great. Thanks a lot, guys. I appreciate the time.

Our next question is a follow-up from Jim Macdonald of First Analysis. Please go ahead.

Yes. Hi, well again. So, I guess I’d be remiss if I didn’t ask Jerry. If he has any different plans or any new plans for the company and any change in kind of the type of acquisitions, the business type or anything that you might pursue?

Yes, Jim, as you and I have talked about in the past, Steve and I have sat alongside each other in locked arms, really for the past 50 years. So there hasn’t been a significant decision that’s been made in their period of time, where we didn’t both way in and we weren’t both involved. So I would say as we sit here today, and look forward, I think we will continue to see opportunities that we haven’t seen in the past. I think we will look for larger opportunities and I think we are dissecting the business in a way to really focus on higher growth and higher margin businesses. All of which would occur whether Steve was in the chair, or I was in the chair. But I do believe that we are uniquely positioned today and we have a strong platform and I think the future is bright.

And Jim, let me add that my expectation is more and better.

Okay, with that I will let you go here. Thanks a lot.

Being no further questions, this concludes our question-and-answer session. I would now like to turn the conference back over to Steve Gerard for any closing remarks.

Okay, thank you very much, Carrie. As this is my last conference call, I’d like to take this opportunity to first thank our shareholders and analysts for your support overall of these years and most important to our over 4,000 associates whose hard work, professionalism focus on client service and dedication to CBIZ has made the company the success it is today. I look forward to listening into the next quarterly call that Jerry and Ware will have and I wish you all a good day. Thank you very much.