CENTURY BUSINESS SERVICES is a diversified services company which acting through its subsidiaries provides business services primarily to small and medium-sized businesses as well as individuals governmental entities and not-for-profit enterprises throughout the United States and in Toronto Canada. Their business is classified in three reportable segments: Business Solutions; Benefits and Insurance; and National Practices. CBIZ Inc. has a market cap of $405.5 million; its shares were traded at around $6.56 with a P/E ratio of 12.2 and P/S ratio of 0.6. CBIZ Inc. had an annual average earning growth of 14.9% over the past 5 years.
Highlight of Business Operations:Revenue for the six months ended June 30, 2009 grew by $36.7 million, or 9.8%, versus the comparable period in 2008. Revenue from newly acquired operations, net of divestitures, contributed $49.4 million, or 13.3% to the growth in revenue, while same-unit revenue declined by 3.4%, or $12.7 million. Earnings per share from continuing operations increased 8.1% to $0.40 per diluted share for the six months ended June 30, 2009 from $0.37 per diluted share for the comparable period in 2008.
The Company has instituted several programs to control and reduce expenses. These programs include appropriately matching staffing resources to expected revenue. During the six months ended June 30, 2009, the Company incurred $1.2 million of severance related costs as it has adjusted its workforce, which represents an increase of $1.1 million from the comparable period in 2008.
Corporate general and administrative expenses Corporate general and administrative (G&A) expenses decreased by $0.1 million to $7.7 million for the three months ended June 30, 2009, from $7.8 million for the comparable period of 2008, and declined as a percentage of revenue to 4.1% from 4.4% for the three months ended June 30, 2009 and 2008, respectively. The primary components of G&A expenses for the three months ended June 30, 2009 and 2008 are illustrated in the following table:
Income tax expense CBIZ recorded income tax expense from continuing operations of $4.5 million and $3.9 million for the three months ended June 30, 2009 and 2008, respectively. The effective tax rate for the three months ended June 30, 2009 was 40.1%, compared to an effective rate of 36.1% for the comparable period in 2008. The increase in the effective tax rate primarily relates to the favorable settlement of a portion of an IRS audit in 2008 and the reversal of certain tax reserves related to the audit in 2008. There were no reversals of estimated tax reserves in the second quarter of 2009.
The largest components of operating expenses for the Financial Services group are personnel costs, occupancy costs, and travel related expenses which represented 87.4% and 89.3% of total operating expenses for the three months ended June 30, 2009 and 2008, respectively. Personnel costs increased $12.9 million for the three months ended June 30, 2009 compared to the same period in the prior year. The overall increase was driven by a $15.3 million increase in costs associated with the December 31, 2008 acquisitions, and was partially offset by same-unit personnel cost reductions of $2.4 million. Those reductions were attributable to reduced staffing levels in some locations that experienced reduced client demands, partially offset by higher severance costs of $0.8 million. Occupancy costs increased by $1.7 million to 6.3% of revenue for the three months ended June 30, 2009 versus 5.6% of revenue for the comparable period in 2008. The increase in occupancy costs related
The decrease in same-unit revenue was primarily caused by three factors: (1) reductions in revenue of approximately $1.2 million in the retirement and advisory businesses whose revenues are aligned with the underlying asset valuations; (2) a decrease of approximately $0.3 million in same-unit payroll revenue primarily as a result of the decline in interest rates which negatively affected the investment income earned on payroll funds held on behalf of clients; and (3) a decrease of approximately $1.2 million in same-unit human resources revenue due to lower client demand for recruiting and other consulting services. In addition, group health and property and casualty same-unit revenues declined for the three months ended June 30, 2009. Group health revenue for the three months ended June 30, 2009 declined approximately 1.7% versus the comparable period in 2008 due the impact of higher rates of unemploy
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