Q2 2021 CBIZ Inc Earnings Call
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[music].
Okay.
Good day and welcome to the <unk> second quarter 2021 results conference call. All participants will be the listen only mode should you need assistance. Please signal a conference specialist by pressing Star then zero. After today's presentation, there will be and opportunity to ask questions to ask.
A question you May Press Star then 1 on your Touchtone phone to withdraw your question. Please press Star then 2 please.
Please note. This event is being recorded I would now like to turn the conference over to Lori and a Vegas director of corporate Relations. Please go ahead.
Good morning, everyone.
The question you for joining us for the feed the second quarter and first half 2021 results conference call in connection with this call. Today's press release has been posted to the Investor Relations page of our website.
Dot com.
As a reminder, this call is being webcast and a link to the life.
The webcast as well as the archived replay and transcript can also be found on the website.
Before we begin our presentation, we would like to remind you that during the call management may discuss certain non-GAAP financial measures.
Conciliations that'd be the measures can be found in the financial tables.
And thank the press release and in the Investor presentation on our website.
Today's conference call May also include forward looking statements, including statements regarding our business.
Mutual condition, we felt the of operations cash flow strategies and prospects.
Our forward looking statements represent only estimates on the day of this conference call and are not intended to give any assurance that the actual future results.
Because forward looking statements relate to matters that have not yet occurred. These statements are inherently subject to risks and uncertainties.
And then.
And here's could cause future results to differ materially.
The more detailed description of such factors can be found in our filings with the Securities and Exchange Commission.
Please note that this assumes no obligation to update forward looking statements.
Joining us for today's call of Gerrick Briscoe President.
And Chief Executive Officer, and where growth Chief Financial Officer, I will now turn the call over to Jerry for his opening remarks, Barry. Thank you Lori and good morning, everyone.
And with the release of our second quarter results I'm proud to report another quarter of exceptional performance.
The strong growth across.
The fact every major service line.
But before I comment on our most recent results I'd like to discuss the legal settlement that was announced at the end of June.
The settlement related to a lawsuit pertaining to actuarial services provided 8 years ago by a former employee regarding valuation of pension plan liabilities.
Yes.
Nearly as unusual and a number of ways, including the complex and Texas technical nature of both the claims and defenses by each of the parties.
There was also very little of legal precedent related to many of the claims the guide the jewelry and their deliberations.
These facts created unique risks, including the claims by plaintiff could have resulted.
Gulf of and large jury verdict of up to several hundred million dollars. If the jewelry elected the award punitive damages.
We were in the midst of the trial and the parties reach an agreement.
Given the complexity of the facts the risk of substantial loss and the uncertainty inherent and the jury trials.
And this 1 in particular.
We.
Settling the case for the amount of previously disclosed who's the most responsible decision for the company and our shareholders.
Moreover, the settlement does not materially increase our debt.
And our steady cash flow strong balance sheet and access the capital allows us to continue to make investments to grow our business.
The strategic.
Physicians buyback stock and fully fund our operations.
It's also worth noting that this is the FERC legal settlement and our 25 year history relating to and errors and omissions claim that substantially exceeded the limits of our insurance coverage and <unk>.
While we do not disclose the limits of our insurance coverages, we have considerably increase the.
<unk> of our coverage for claims over the past 8 years.
And it's also important to view the impact of the settlement in the context of the nonrecurring events.
And not allow us to overshadow the exceptional performance and results that we're seeing and our business.
With that I want to turn to our performance for the first half of 2021.
The amount of and I am pleased to report that through the first 6 months of this year. We are seeing improved performance from nearly every major service line.
<unk> and the strongest year to date organic revenue growth that we've experienced and over a decade.
Within our financial services group, we continued to experience very strong demand for our core accounting and tax services.
So seeing a return of demand for our more project oriented advisory services, and particularly those related to helping our clients with the acquisitions and divestitures.
In addition over the last several years, we've made substantial investments in tools and systems and assist our leaders to improve revenue and profitability.
And accelerate the time it takes the.
Collect accounts receivables.
Our most recent results within our financial services Division and reflect the outcome of those investments.
Our government health care consulting businesses.
And so continues to enjoy solid growth.
Although that business has been somewhat impacted by delays and some states are holding off on certain work.
We're also there are more fully reopened and resumed more normal operations.
Even with these potential delays the work is required and will be completed at some time in the future, but we are monitoring how timing may impact the rate of growth for this business through the remainder of the year.
Turning to our benefits and insurance group the trend continues.
Continues to fall and what we saw and the second half of last year with high demand and our employee benefits property and casualty and retirement plan advisory businesses.
Within our property and casualty business, our commercial side of the business is fueling very strong growth.
While we are also seeing steady improvement on the program side.
Throughout last year, we talked about some.
Work until the of our P&C program business being more impacted by the COVID-19, pandemic and others for <unk>.
Examples of the reduction and leisure travel and related spending we experienced early in the pandemic impacted parts of that business like adventure sports.
These areas of starting to come back as these industries continue to recover.
And our payroll business last year, specifically during the second quarter, we saw a drop and the number of pes as our clients reduce their workforce.
While this trend of eventually leveled off later in 2020, we are now seeing the number of paid pace trend upwards, again, which points to recovery among our clients and creates additional opportunities for this business.
While the number of paid has not returned to pre pandemic levels. There are reasons for optimism given the current trends.
Client retention within our benefits and insurance business remains strong.
Similar to our financial services business. We are also experiencing increasing demand for many of our project based services for example, the.
The improving economy is driving new sales and growth within our executive recruitment and compensation consulting practices.
As many businesses look to add talent and fill critical roles.
1 additional area I want to highlight is our investment and producers and our ability to attract retain and develop our producers as the central to accelerate.
The growth.
And I am pleased to report that we continue to make good progress and this areas.
The new producers, we brought on in recent years and our employee benefits business continue to outperform our projections.
And we have also added to the number of producers and our retirement plan services and our property and casualty businesses.
We have also added.
Organic path the within our recruiting team to be more targeted and our outreach and accelerate our efforts to secure talent.
With that I will turn it over to wear for his comments.
Thank you Jerry and good morning, everyone.
I wanted to take a few minutes to go over the highlights of the numbers. We released this morning and talk about what we expect.
For the full year.
The results we reported for the second quarter and first half include the impact of 2 major nonrecurring items.
As required and we reported GAAP numbers fully reflect the impact of those items.
And in order to provide greater clarity on the results from continuing operations.
We have also presented adjusted numbers to exclude the impact of those items.
Gary talked about the settlement, we reached on the PMC matter and the second quarter charge of $35 million that we reported net of insurance coverage and.
In addition, during the second.
The quarter, we divested a small non core wholesale insurance operation and we reported a gain of $6.4 million as a result of that transaction.
The earnings release includes a reconciliation of those nonrecurring items from the GAAP presentation to arrive at adjusted.
Per share numbers.
And of course, we can answer any further questions. You may have on these 2 non recurring items during the Q&A period, following our comments, but without going into further detail I will focus my comments here on the adjusted numbers.
The adjusted numbers are most useful to you.
As you assess the health and performance of our ongoing business.
We are very pleased to report strong growth and total revenue of 17, 6% and the second quarter and total revenue growth of 12, 6% for the 6 months ended June 30th.
The earnings growth is being driven by a combination of strong same unit growth of 10, 5% and the second quarter and same unit growth of 6.8% for the 6 months.
The acquisitions, we made last year and through the first half of this year have contributed 7.
We're at 1% to growth and the second quarter and contributed 5.9% to revenue growth and the 6 months.
The business service lines that were more COVID-19 impacted and reflect the declines in 2020 are now recovering and have reported growth through the first half this year.
And as we finished 2020 I commented that those businesses represented about 16% of total revenue had collectively declined 12, 8% with the.
Full year 2020, compared with 2019.
Collectively these businesses reported growth.
<unk> of 6.7% for the first half this year, which is in line with consolidated first half same unit revenue growth as the.
Evidence by this very strong first half 6.8% same unit consolidated revenue growth the core businesses that reported growth last year and 2020 are continuing.
And to perform very well the first half this year.
Acquisitions continue to be an important component of our growth strategy.
And as a reminder, we announced 7 acquisitions last year and 2020 that are expected to contribute $45 million of annualized revenue.
Through the first 6 months. This year, we made 4 additional acquisitions that are expected to come true.
Contribute $42 million of annualized.
<unk> revenue.
The newly acquired businesses are performing very well and we continue to evaluate a number of potential acquisitions with an active.
Active pipeline under review.
Total revenue and our financial services growth increased by 21, 1% and the second quarter with same unit revenue up by 13, 3% compared with a year ago from.
Of the 6 months total revenue grew by 14%.
The same unit revenue up by 8.5 per cent.
Turning to the benefits and insurance group and the second quarter total revenue grew by 11, 7% with.
The same unit revenue up by 5.3%.
For the 6 months total revenue.
And within benefits and insurance grew by 10, 6% the same unit revenue up by 3.4%.
The revenue growth recorded this year theres been fueled by the tools and the investments we've made in recent years.
There have been significant investments to build stronger producer teams.
<unk>, we have developed tools to optimize profitability of client engagements within financial services.
Plus our focus on digital marketing efforts is the resulting in a stronger pipeline of potential new business.
And importantly, we have focused resources to boost acquisition activity.
All of these initiatives are gaining traction and represent a concerted effort to enhance revenue growth.
While achieving operating leverage to improve margin over time.
Eliminating the 2 nonrecurring items pre tax income margin was 12, 7% and.
And quarter up 90 basis points, compared with 11, 8% a year ago.
For the 6 months pre tax income margin was 17, 5% of 230 basis points compared with 15, 2% a year ago.
With early.
And the <unk> seasonal tax work this year compared with last year, we experienced tailwind and the first half of this year.
The second half of the year is seasonally more heavily reliant on project work the.
The business is performing very well, but second half revenue growth may be less certain.
A lower cost structure and the first half. This year continues to reflect lessons learned from our experience with the pandemic and reflect and that is reflected in higher first half margins.
As I commented at the end of the first quarter, we are selectively restoring discretionary items that may present.
<unk> and headwinds and margin pressure and the second half of the year.
As we begin to get back and front of clients and prospects.
<unk> expense may begin to increase from current extraordinarily low levels.
With marketing costs after suspending all programs a year ago.
So we elected to conduct a second quarter and media campaign this year.
And we are considering a second campaign later in the year.
Within our benefits costs and healthcare costs have continued to be lower than expected through the first half this year.
Healthcare benefit costs are not highly controllable.
And in the short run and we are expecting second half headwinds as medical visits and elective procedures are beginning to resume and more normal level of activity of foreseeing low levels. In 2020 that have continued through the first half of 'twenty 'twenty 1.
Eliminating the impact.
Pact of nonrecurring items, we are pleased to report adjusted earnings per share of <unk> 50.
For second quarter up 28, 2% compared with 39 compared a year ago.
For the 6 months adjusted earnings per share was $1.43.
36, 2% compared with the dollar.
<unk> reported a year ago.
Cash flow and the liquidity continue to be strong at June 30 of this year, there was $163.3 million outstanding on our $400 million credit.
Facility.
This results and a leverage measure of 1 point O times EBITDA at June 30, with approximately $230 million of unused capacity.
After giving effect to the upcoming payment for the <unk> settlement amount leverage will increase to approximately 1.
And 2.5 times EBITDA was slightly over $200 million of remaining unused capacity.
During the first 6 months this year, we closed 4 new acquisitions and used $51.2 million per acquisitions, including earn out payments for acquisitions.
<unk> closed and previous years.
We also actively repurchase shares and the open market and we used $63.4 million to repurchase approximately $2 million 2 million shares through June 30.
With respect of future earn out payment obligations, we estimate.
Approximately $5.5 million over the balance of this year of.
Approximately $28 million in 'twenty, and 'twenty to approximately $14.4 million. The following year in 2023, and $17.7 million and 'twenty 'twenty 4 with another.
8 of approximately $800000 in 2020.5.
The strong cash flow and a strong balance sheet, we have ample flexibility to strategically deploy capital to actively pursue acquisitions and conduct share repurchases book.
Back 18 months.
During this.
<unk> time period from January of 2020 through today or through June 30 of this year. We have closed 11 acquisitions using approximately $140 million of cash for acquisition purposes.
Over the same 18 month time period.
We've also used approximately $120 million to repurchase 4.3 million shares which is nearly 8% of shares outstanding.
Capital spending the first 6 months this year was $3.3 million with $2.1 million and the second quarter.
Months slower than in recent years and reflects the intentional deferral of spending for facility right.
Facility related decisions and 'twenty 'twenty.
And the normal year, we expect capital spending of approximately $12 million.
But for 2021 we expect the <unk>.
This is spending will come in at approximately $8 million.
Day sales outstanding on receivables continue to reflect improvement.
At June 30 of this year day sales outstanding stood at 84 days compared with 87 days at June 30, a year ago.
Capital with a diverse set of clients and no concentration and the industries, such as hospitality entertainment or travel that may have higher risk attributes of our receivables of continued to perform well.
You may recall, we recorded a $2 million provision for bad debt and the first.
A year ago with bad debt expense for the first half a year ago at 62 basis points of revenue.
Bad debt expense for the first 6 months. This year is the only 5 basis points.
Adjusted EBITDA for the first 6 months this year was $116.2 million.
Our 21% of revenue.
This represents a 25% increase over $92.9 million and the first 6 months a year ago.
For the first 6 months this year the effective tax rate was 24 point of 1%.
Looking to the.
First quarter of 'twenty 'twenty 1.
And there are a number of unpredictable factors can impact the effective tax rate either up or down and we expect to continue we continue to expect a full year effective tax rate of approximately 25%.
With the share repurchase activity to date through the first half we expect full year 2021 weighted average fully diluted share count to be approximately 54 million shares.
As a result of first half acquisition activity, we are raising our full year revenue guidance.
Guidance and we now expect total revenue growth and a range of 10% to 12% over the prior year and that this is up from 8% to 10% growth previously.
First half growth and adjusted earnings per share reflects the fact that the business is very healthy.
As.
Full year expectations for adjusted earnings per share were away and the uncertain potential to incur higher benefit health care costs and the second half coupled with our desire to support selectively restore some level of marketing or other client related activities designed to enhance revenue.
The new growth over time.
For those reasons the level of margin improvement achieved in the first half this year is likely not sustainable for the balance of the year.
We also need to be prudently cognizant of the continuing potential volatility and uncertainty and the environment.
At this point we.
<unk> full year 2021 adjusted earnings per share the grow near the higher end of the range of 12% to 15% over the $1.42 EPS reported for 2020.
Of course, we will have an opportunity to revisit this guidance at the end of the third quarter.
So.
So with these comments I'll conclude and I'll turn it back over to Gerry.
Thank you Ware I'd like to touch on our M&A activity before we turn it over to Q&A.
As I discussed last quarter, we started this year with the strongest M&A pipeline, we've seen and our recent history.
M&A continues to be a key component of <unk> growth strategy.
We expect it will remain a top priority for us and 2021 and beyond especially.
Especially as we see increasing interest and <unk> business the potential partner.
Our performance over the last year on the backdrop of the pandemic demonstrates the value and stability of our business model.
We also continue to emphasize our unique position and the market.
Market, given the breadth and depth of our expertise and our services.
Moreover, our.
And our steady cash flow strong balance sheet and access the capital allows us to continue to make investments and the business that many of our competitors simply cannot fund.
We know that these messages resonate with firms and each of our various businesses.
And we are eager to explore these opportunities.
So far this year, we've completed 4 acquisitions with 3 of those coming and the second quarter.
During the second quarter, we completed 1 acquisition to support our retirement plan services business and another of the acquisition of <unk> and quarter.
Core accounting firm located in the Pacific Northwest.
Which I discussed and our last earnings call.
Most recently at the beginning of June we completed the acquisition of Optimist.
Our firm based in Scottsdale, Arizona that specializes and providing actuarial and <unk>.
Actuarial and consulting services, the government health care agencies to assist and the administration of Medicaid programs.
Septimus has a long history of partnering with CBS and.
And this acquisition will allow us to expand our relationship with existing clients and enable opportunities to scale the services through our national infrastructure.
With this I will turn it over for Q&A.
Thank you we will now begin the question and answer session.
And I'd like to ask a question. Please press Star then 1 on your Touchtone phone. If you are using a speakerphone. Please pick up of your handset before pressing the keys. If at any time of your question has been addressed and you would like to withdraw your question. Please press Star then 2.
And the first question and we will come from Chris Moore with.
With CJS Securities. Please go ahead.
Hey, good morning, guys. Thanks for taking a couple of questions.
So yes same store growth was up I think 6.8% and the first half.
I'm, just trying to get a better sense in terms of how pricing increases works and that.
Maybe talk a little bit and mix between price increases and increased volume from cross selling share gains et cetera.
Yeah, Hi, Chris This is ware.
We do.
We did get some higher yield and some price increases.
Ally.
And with some of the efforts, we talked about the increase or improve the efficiencies and the engagement on the financial services side, and then of course market conditions on the property and casualty insurance side or it's a strong market. So there are some increases there as well.
We typically would say and I don't think this has.
Anything unusual for the first half of this year about half of the increase is due to volume and just increased activity, whereas about half of it is due to pricing increases I think thats. The case here for the first half this year.
Got it and very helpful.
Hum.
How much revenue did the divested wholesale insurance business, how much was that generating on a kind of.
Trailing 12 months basis.
Yes, Chris this is where again slightly less and $3 million. Okay. It was actually a pretty small non core piece of our business.
Got it.
And <unk>.
Last 1 from me.
On the.
University of Pittsburgh settlement so.
I know there is 1 other active case out there as the Tech partners I'm wondering if maybe you could kind of compare and contrast that to the university of pitch.
Pittsburgh for example, you talked about.
No real legal precedent, which was the big risk factor on the University of Pittsburgh very complicated.
The kind of any thoughts on the on the sale of tech side.
Hey, Chris This is Gerry how are you.
I'll provide a couple of comments on the what I would say are very different facts and circumstances related to the PMC.
Compared.
<unk> Tech the PMC claim was at its core and edge.
Errors and omissions claim relating to work that we did very complex actuarial work, we did on the pension plan.
The <unk> case actually as of clean.
By the purchaser of if you'll recall, our medical billing business.
Some years ago and.
Again, very very different claims very different facts and circumstances and we believe we have.
As we as we've announced and a strong defensive to that claim and we will vigorously pursue those defenses.
Got it and I will leave it there and jump back in line. Thanks, guys.
And again, if you'd like to ask a question. Please press Star then 1 the next question will come from Marc Riddick with Sidoti and company. Please go ahead.
Mr. <unk> you are now and the podium perhaps your line is muted.
Hi, good morning.
1 of the Mark.
So I was wondering if you think of the discuss a little bit around the the announcements around the new headquarters and maybe some of the things that are that are going into the that and and from a timeframe and and and and and sort of how that that might well I know that the the pressures talk.
The next next next September but I was wondering can you sort of give a little bit of color around the around that and what we could expect there.
Yeah. Thanks Mark.
So this is something we've been working on for a while we've been in our existing facilities for about 80 years and candidly.
Just the way that we work and the way.
And that are our workforce comes to work and the way we collaborate with each other.
And it has changed over that period of time and while we're very happy with where we are and enjoying certainly the time that we spent here we.
We were really excited about the opportunity to do.
And to enter into be a anchor tenant at a brand.
Talked about facility state of the art.
We are actually at the table, helping the design that facility.
And as the anchor tenant and it will allow us to really prepare for the next 20 years and looked at the way our workforce comes to the office the way that we collaborate with each other of the.
The way that we collaborate with our clients, including state of the art technology.
Workflow and the in the design and the.
And the <unk>.
Workspaces that are within their facilities, so kind of across the board really just a great opportunity for us to do that.
Probably off of saw that we received considerable support from the state of Ohio.
And from the local governments and we're really appreciative of that partnership as well so kind of everything came together to allow us to do this and we're excited about what that means for us going forward.
And then the timing I guess is more.
So we're looking at the fall of next year.
If.
And correctly.
Or are we sort of targeting.
A from a seasonal standpoint, and certainly doesn't.
The after taxes and but I was wondering if we should think about any potential disruptions or or anything along those lines.
So to take into consideration of prediction.
Mark the time and you are right its and the fall of next year, we don't have exact kind of move in date, but it will be the fall of next year, the only kind of potential disruption and I think its pretty insignificant, particularly in light of what we've learned over the past year is that there will be some GAAP between the time that we leave this space our existing space and the times of the next phase will be available, but we're working through that now.
And the combination of flex space, which is the.
It is available.
And our local market and some continued remote work will allow us to bridge that gap, so really no no bearing material bearing on the business.
And the move that we can see right now.
Okay.
Okay, Great and then I was wondering if you could spend a little time talking about you touched on this and your prepared commentary, but I wanted to expand a little bit and maybe some of the.
The progress you are making can certainly from the numbers and certainly seems low it's positive but.
Some of the benefits of here.
Youre getting from your from your marketing programs.
Whether it would be the sort of the digital outreach that was ramped up during the pandemic and maybe we're seeing the benefits of some of that as well as you know.
And further.
Progress.
And that's made with some of those new context, and then maybe you could also talk a bit about.
How we should think about or how you feel you are.
<unk>.
Local market share has progressed during the during the course of the challenges of the pandemic. Thank you.
Sure. Thanks Mark.
Just like many businesses, we learned a lot over the past 16 months right and 1 of the things I think that has been most beneficial to us is our ability to provide really our value of our unique value proposition.
His breadth of services and depth of expertise and a way that the.
Candidly, we had and experienced before the before Covid. So and example of that is.
When we sit with the client and our clients have multi disciplinary needs the.
Pre pandemic oftentimes, we would have to fly people in from around the country.
Country of the experts of subject matter experts to sit with our clients and sit with our team the salt to solve whatever challenges or opportunities. The client was working on to day through the virtual tools that we've all learned to adopt that's much easier to do our clients are far more receptive to that and we are far more comfortable providing services and that way.
As far as digital is concerned.
We reached out to our clients.
And the outside of the pandemic.
As we talked about on earlier calls very frequent webinar programs and trying to anticipate what was the front of mind for them. What they are of greatest needs were and putting programs in front of them and that.
The effort has continued and we've also learned to follow up with our clients using those digital channels and digital outreach in ways. During the pandemic and that effort has continued as well and as a result of that.
And the top of the funnel for our sales pipeline.
It has not been this full and many many many years.
And so not only have we learned to <unk>.
The identify opportunities and put them in the top of the funnel, but also to convert those opportunities to sales and AR.
And our hybrid approach some face to face, but certainly some from more virtual so and we're learning the close of those opportunities as well so we've learned a lot.
Continue to learn but the but the.
And the future looks very promising and all of those regards.
So very encouraged and thank you very much.
As a reminder, if you would like to ask a question. Please press Star then 1.
Again that is star and then 1 if you would like to ask a question.
At this time there are no further questions from the question queue. This will conclude today's question and answer session and I would like to turn the conference back over to Jerry <unk> for any closing remarks.
Thank you Sean before I conclude the call today I want to put our performance for the first half of this year and the context of our business model and what we believe these results mean for the rest of the year and beyond.
Over the last several quarters I've emphasized the fundamental attributes of our business model, including the of central and recurring nature of our services.
Hi.
High level of client retention year over year.
The diversity of our client base in terms of size and industry and our broad geographic footprint.
As we've demonstrated over the last 16 months these attributes allow us to perform well even in uncertain economic conditions.
Moreover, the breadth and depth of our services puts us in the unique position to.
Relative to our clients' needs, especially when they require a coordinated multi disciplinary approach.
I've talked about the importance of our model because of the strength and stability of the offers and both good and less favorable economic conditions.
The extraordinary results we reported today are a testament to this model.
But also demonstrate the potential.
Potential of our business moving forward.
For the first half of 2021.
Given the all of our service lines are growing many of the rate we have not experienced and years.
And these results we are seeing the return on our long term investments, we've made and our people tools and systems.
We're also seeing the value we bring.
The biggest clients and both new ways, but also and the services and solutions they rely on year over year.
And of course, our team continues to be the driving force behind these results.
The energy and commitment of our team and their willingness to go above and beyond for our clients and each other is evident and our performance.
And I'm incredibly proud of.
And what we've accomplished and the first half and even more excited about what is possible as we look ahead.
Based on our strong performance year to date.
We increased our revenue guidance today, and we are guiding adjusted EPS growth of the high end of the 12% the 15% range that we previously announced.
For the reasons were outlined earlier we.
We're not yet prepared to increase our adjusted EPS guidance.
But remain optimistic given the momentum and our business and we look forward of revisiting. This at the end of the third quarter.
I want to close by thanking our analysts and our investors as we always do for your continued support and.
And I'd also like to take this opportunity to invite our analysts and shareholders.
Here's to participate and our virtual Investor conference to be held in September.
And that will include deeper dives into our business operations and culture.
In addition to Q&A, with where and I and some of our business leaders you.
And you'll be receiving an invitation and more information in the coming weeks.
Thank you for your time and have a great day.
The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
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Yeah.
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Yeah.
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Good day and welcome to the <unk> second quarter 2021 results conference call all participants will be in a listen only.
The mode should you need assistance. Please signal a conference specialist by pressing Star then zero. After today's presentation, there will be and opportunity to ask questions to ask a question you May Press Star then 1 on your Touchtone phone.
To withdraw your question. Please press Star then 2 please.
Please note this event.
And being recorded.
I'd now like to turn the conference over to Lori The Vegas director of corporate Relations. Please go ahead.
Good morning, everyone and thank you for joining us for the feed the second quarter and first half 2021 results conference call in connection with this call.
Today's press release has been posted to the Investor Relations page of our website.
Dot com.
As a reminder, this call is being webcast and a link to the live webcast as well as an archived replay and transcript can also be found on our website.
Before we begin our presentation.
And if he would like to remind you that during the call management may discuss certain non-GAAP financial measures.
Conciliation of these measures can be found and the financial tables of today's press release and in the Investor presentation on our website.
Today's conference call May also include forward looking.
Statements, including statements regarding our business.
The interest condition results of operations cash flow strategies and prospects.
Forward looking statements represent only estimates on the day of this conference call and are not intended to give any assurance that the actual future.
And.
Because forward looking statements relate to matters that have not yet occurred. These statements are inherently subject to risks and uncertainties.
Many factors could cause future results to differ materially.
The more detailed description of such factors can be found in our filings with the.
The Securities and Exchange Commission.
Please note that <unk> assumes no obligation to update forward looking statements.
Many of US for today's call are Jerry <unk>, President and Chief Executive Officer, and where growth Chief Financial Officer, I will now turn the call over to Jerry for his opening remarks.
Gary Thank you Lori and good morning, everyone with.
And with the release of our second quarter results and I'm proud to report another quarter of exceptional performance.
The strong growth across nearly every major services line.
But before I comment on our most recent results I'd like to discuss the legal settlement that was announced at the end of June.
The settlement related to a lawsuit pertaining to actuarial services provided 8 years ago by a former employee regarding valuation of pension plan liabilities.
It was unusual and a number of ways, including the complex and Texas technical nature of both the claims and defenses by each of the parties.
There is also very little of legal precedent related to many of the claims the guide the jewelry and their deliberations.
These facts created unique risks, including the claims by cleanup could have resulted in large jury verdict of up to several hundred million dollars if the <unk>.
Gary elected the award punitive damages.
We were in the midst of the trial and the parties reaching.
Okay.
And given the complexity of the facts the risk of substantial loss and the uncertainty inherent in the jury trials.
And this 1 in particular.
We believe that settling the case for the amount of previously disclosed who is the most responsible decision for the company and our shareholders.
Moreover, the settlement does not.
And the greatly increase our debt.
And our steady cash flow strong balance sheet and access the capital allows us to continue to make investments to grow our business complete strategic acquisitions buyback stock and fully fund our operations.
It's also worth noting that this is the FERC legal settlement and our 25 year history really.
Material errors and omissions claim that substantially exceeded the limits of our insurance coverage and why.
While we do not disclose the limits of our insurance coverages, we have considerably increase the amount of coverage for claims over the past 8 years.
It's also important to view the impact of the settlement in the context of the nonrecurring events.
And then and not allow us to overshadow the exceptional performance and results that we're seeing and our business.
With that I want to turn to our performance for the first half of 2021.
I am pleased to report that through the first 6 months of this year. We are seeing improved performance from nearly every major service line.
The resulting and the strongest year to date organic.
<unk> revenue growth that we've experienced and over a decade.
Within our financial services group, we continue to experience very strong demand for our core accounting and tax services.
We're also seeing a return of demand for our more project oriented advisory services, particularly those related to helping our clients with the acquisitions and divestitures.
In addition over the last several years, we've made substantial investments in tools and systems that assist our leaders to improve revenue and profitability.
And accelerate the time it takes the collect accounts receivables.
Our most recent results within our financial services Division and reflect the outcome of those investments.
Our government health care consulting.
Business has also continues to enjoy solid growth.
Although that business has been somewhat impacted by delays and some states are holding off on certain work until they are more fully reopened and resumed more normal operations.
Even with these potential delays the work is required and will be completed at some.
Timing of the future, but we are monitoring how timing may impact the rate of growth for this business through the remainder of the year.
Turning to our benefits and insurance group the trend continues to fall of what we saw and the second half of last year with high demand and our employee benefits property and casualty and retirement plan advisory businesses.
Within our.
The property and casualty business, our commercial side of the business is fueling very strong growth.
While we are also seeing steady improvement and the program side.
Throughout last year, we talked about some areas of our P&C program business being more impacted by the COVID-19 pandemic and others for.
For example, the reduction and leisure travel and related spending we explore.
Early in the pandemic impacted parts of that business like adventure sports.
These areas are starting to come back as these industries continue to recover.
And our payroll business last year, specifically during the second quarter, we saw a drop and the number of pes as our clients reduce their workforce.
While this trend eventually leveled.
<unk> later in 2020, we are now seeing the number of paid pace trend upwards, again, which points to recovery among our clients and creates additional opportunities for this business.
While the number of Pes has not returned to pre pandemic levels. There are reasons for optimism given the current trends.
Client retention within our benefits.
The <unk> reinsurance business remains strong.
Similar to our financial services business. We are also experiencing increasing demand for many of our project based services from.
For example, the improving economy is driving new sales and growth within our executive recruitment and compensation consulting practices.
As many businesses look to add talent.
<unk> and fill critical roles.
1 additional area I want to highlight is our investment and producers our ability to attract retain and develop our producers is essential to accelerate organic growth and.
And I am pleased to report that we continue to make good progress and this areas.
The new producers, we brought on in recent years and our employee benefits.
<unk> business continued to outperform our projections.
And we have also added to the number of producers and our retirement plan services and our property and casualty businesses.
We have also added to the capacity within our recruiting team to be more targeted and our outreach and accelerate our efforts to secure talent.
With that I will turn it over to wear for his comments.
Thank you Jerry and good morning, everyone.
And I wanted to take a few minutes to go over the highlights of the numbers. We released this morning and talk about what we expect for the full year.
The results we reported for the second quarter and first half include the impact of 2 major nonrecurring items as.
And as.
And we reported GAAP numbers fully reflect the impact of those items.
But in order to provide greater clarity on the results from continuing operations. We have also presented adjusted numbers to exclude the impact of those items.
Terry talked about the settlement, we reached on the PMC matter.
And the second quarter charge of $35 million that we reported net of insurance coverage and.
In addition, during the second quarter, we divested a small non core wholesale insurance operation and.
We recorded a gain of $6.4 million as the result of.
Higher transaction.
The earnings release includes a reconciliation of those nonrecurring items and the GAAP presentation to arrive at adjusted earnings per share numbers of.
Of course, we can answer any further questions. You may have on these 2 non recurring items during the Q&A period following our comment.
Of that without going into further detail I will focus my comments here on the adjusted numbers. We think the adjusted numbers are most useful to you as you assess the health and performance of our ongoing business.
We are very pleased to report strong growth and total revenue of $17.6.
<unk> percent and the second quarter and total revenue growth of 12, 6% for the 6 months ended June 30th.
Revenue growth is being driven by a combination of strong same unit growth of 10, 5% and the second quarter and same unit growth of <unk>.
And 6.8% for the 6 months.
The acquisitions, we made last year and through the first half of this year have contributed 7.1% to growth and the second quarter and contributed 5.9% to revenue growth and the 6 months.
The business service lines that are.
6 of our Covid impacted and reflect the declines in 2020 are now recovering and have reported growth through the first half this year.
As we finished 2020 I commented that those businesses represented about 16% of total revenue had collectively declined.
<unk> of 12, 8% for the full year 2020, compared with 2019.
Collectively these businesses recorded growth of 6.7% for the first half this year, which is in line with consolidated first half same unit revenue growth as.
And as evidenced by this very strong.
The first half 6.8% same unit consolidated revenue growth the core businesses that recorded growth last year and 2020 are continuing to perform very well the first half this year.
Acquisitions continue to be an important component of our growth strategy.
And as a reminder.
We announced 7 acquisitions last year, and 2020 that are expected to contribute $45 million of annualized revenue.
Through the first 6 months this year, we made 4 additional acquisitions that are expected to.
Contribute $42 million of annualized.
The revenue.
The newly acquired businesses are performing very well and we continue to evaluate a number of potential acquisitions with an active pipeline under review.
Total revenue and our financial services growth increased by 21, 1% and the second quarter.
Same unit revenue up by 13, 3% compared with a year ago.
For the 6 months total revenue grew by 14, 1% the same unit revenue up by 8.5%.
Turning to the benefits and insurance group and the second quarter total revenue.
With so by 11, 7%.
The same unit revenue up by 5.3%.
For the 6 months total revenue within benefits and insurance grew by 10, 6% with same unit revenue up by 3.4%.
The revenue growth.
Growth recorded this year has been fueled by the tools and the investments we've made in recent years.
There have been significant investments to build stronger producer teams, we have developed tools to optimize profitability of client engagements within financial services.
Our focus on digital marketing efforts.
<unk> grew as the resulting and a stronger pipeline of potential new business.
And importantly, we have focused resources to boost acquisition activity.
All of these initiatives are gaining traction and represent a concerted effort to enhance revenue growth.
While achieving operating leverage.
And to improve margin over time.
Eliminating the 2 nonrecurring items pretax income margin was 12, 7% and the second quarter up 90 basis points compared with 11, 8% a year ago.
For the 6 months pretax income.
Margin was 17, 5% of 230 basis points compared with 15, 2% a year ago.
With early seasonal tax work this year compared with last year, we experienced <unk> and the first half of this year.
The second half of the year.
Income is seasonally more heavily reliant on project work the.
The business is performing very well, but second half revenue growth may be less certain.
A lower cost structure and the first half this year continues to reflect lessons learned from our experience with the pandemic as reflect and that is.
Year and higher first half margins.
As I commented at the end of the first quarter, we are selectively restoring discretionary items that may present, some headwinds and margin pressure and the second half of the year.
As we begin to get back and front of clients and prospects related.
<unk> expense may begin to increase from current extraordinarily low levels.
With marketing costs after suspending all programs a year ago, we elected to conduct a second quarter media campaign this year.
And we are considering a second campaign later in the year.
T and our benefits costs and health care costs have continued to be lower than expected through the first half this year.
Healthcare benefit costs are not highly controllable and the short run and we are expecting second half headwinds as medical visits and elective procedures are beginning to resume and more.
With him of level of activity after seeing low levels in 2020 that have continued through the first half of 'twenty 'twenty 1.
Eliminating the impact of nonrecurring items. We are pleased to report adjusted earnings per share of <unk> 54.
For second quarter up 20.
8.2% compared with 39 compared a year ago.
For the 6 months adjusted earnings per share was $1.43.
Up 36, 2% compared with the dollar.
And <unk> reported a year ago.
Cash.
Flow and liquidity continue to be strong at June 30 of this year, there was $163.3 million outstanding on our $400 million credit facility debt.
This results and a leverage measure of 1 <unk> times EBITDA at June 30, with approximately 230.
$30 million of unused capacity.
After giving effect to the upcoming payment for the <unk> settlement amount leverage will increase to approximately 125 times EBITDA was slightly over $200 million.
Of the remaining unused capacity.
During the first.
First 6 months this year, we closed 4 new acquisitions and used $51.2 million per acquisitions, including earn out payments for acquisitions closed in previous years.
We also actively repurchase shares and the open market and we used $63.4 million.
The repurchase of approximately $2 million 2 million shares through June 30.
With respect of future earn out payment obligations, we estimate approximately $5.5 million over the balance of this year and.
Approximately $28 million in 2020.2.
Approximately $14.4 million. The following year end 2023, and $17.7 million from 'twenty 'twenty 4 with another approximately $800000 in 2020.5.
The strong cash flow and a strong balance sheet we.
Total flexibility to strategically deploy capital to actively pursue acquisitions and conduct share repurchases.
Looking back 18 months during this challenging time period from January of 2020 through today or through June 30 of this year we have.
Closed 11 acquisitions, using approximately $140 million of cash for acquisition purposes over the.
The same 18 month time period.
Also used approximately $120 million to repurchase 4.3 million shares which is nearly 8% of shares outstanding.
Outstanding.
Capital spending the first 6 months this year was $3.3 million with $2.1 million and the second quarter.
And this is lower than in recent years and reflects the intentional deferral of spending for facility rate of aid the.
<unk> related decisions.
And 2020.
And the normal year, we expect capital spending of approximately $12 million.
But for 2021 we expect capital spending will come in at approximately $8 million.
Day sales outstanding on receivables continue.
To reflect improvement.
At June 30 of this year day sales outstanding stood at 84 days compared with 87 days at June 30, a year ago.
And with a diverse set of clients and no concentration and the industries, such as hospitality entertainment or travel.
That may have higher risk attributes our receivables of continued to perform well.
You may recall, we recorded a $2 million provision for bad debt and the first quarter a year ago with bad debt expense for the first half a year ago at 62 basis points of revenue.
And.
<unk> debt expense for the first 6 months this year, it's only 5 basis points.
Adjusted EBITDA for the first 6 months this year was $116.2 million or 21% of revenue.
This represents a 25% increase over $92.9.
Bad debt and the first 6 months a year ago.
For the first 6 months this year the effective tax rate was 24 point of 1%.
Looking to the full year of 'twenty 'twenty 1.
There are a number of unpredictable factors can impact the effective tax rate either up.
Are down and we expect to continue and we.
We continue to expect a full year effective tax rate of approximately 25%.
With the share repurchase activity to date through the first half we expect full year 2021 weighted average fully.
Diluted share count to be approximately 54 million shares.
As a result of first half acquisition activity, we are raising our full year revenue guidance and we now expect total revenue growth and a range of 10% to 12% over the prior year and that this was up from.
From 8% to 10% growth previously.
First half growth and adjusted earnings per share reflects the fact that the business is very healthy.
As we set full year expectations for adjusted earnings per share were away and the uncertain potential to incur higher benefit healthcare.
Care costs, and the second half coupled with our desire because of selectively restore some level of marketing or other client related activities designed to enhance revenue growth over time.
And for those reasons and the level of margin improvement achieved in the first half this year is likely not sustainable for the.
Balance of the year.
We also need to be prudently cognizant of the continuing potential volatility and uncertainty and the environment.
At this point, we expect full year 2021 adjusted earnings per share the grow near the higher end of the range of 12% to 15%.
Over the $1.42, EPS reported for 2020.
So with these comments I'll conclude and I'll turn it back over to Gerry.
Thank you Ware I'd like to touch on our M&A activity before we turn it over to Q&A.
Q&A.
As I discussed last quarter, we started this year with the strongest M&A pipeline, we've seen and our recent history.
M&A continues to be a key component of <unk> growth strategy and.
And we will remain a top priority for us and 2021 and beyond.
Especially as we see increasing interest and fee business of potential <unk>.
<unk> performance over the last year on the backdrop of the pandemic demonstrates the value and stability of our business model.
We also continue to emphasize our unique position and the market given the breadth and depth of our expertise and our services.
Moreover.
Our steady cash flow strong balance sheet and access the capital.
<unk> allows us to continue to make investments in the business and many of our competitors simply cannot fund.
We know that these messages resonate with firms and each of our various businesses and we are eager to explore these opportunities.
So far this year, we've completed 4 acquisitions with 3 of those coming and the second quarter.
During the second quarter.
And we completed 1 acquisition to support our retirement plan services business and another the acquisition of <unk> and Porter.
Core accounting firm located in the Pacific Northwest, which I discussed and our last earnings call.
Most recently at the beginning of June we completed the acquisition of Optimist.
Our firm based in Scottsdale.
Stellar, Arizona that specializes and providing actuarially actuarial and consulting services the government health care agencies to assist and the administration of Medicaid programs.
Optimists has a long history of partnering with Cvs.
And this acquisition will allow us to expand our relationship with existing clients and enable opportunity.
<unk> scaled the services through our national and infrastructure.
With this I will turn it over for Q&A.
Thank you we will now begin the question and answer session.
And I'd like to ask a question. Please press Star then 1 on your Touchtone phone. If you are using a speakerphone. Please pick up of your handset before pressing.
If at any time of your question has been addressed and you would like to withdraw your question. Please press Star then 2.
And the first question and say, we will come from Chris Moore with CJS Securities. Please go ahead.
Hey, good morning, guys. Thanks for taking a couple of questions.
Yes.
Pressing the same store growth was up I think 6.8% and the first half.
Im just trying to get a better sense in terms of how pricing increases works and that.
Maybe talk a little bit the mix between price increases and increased volume from cross selling share gains et cetera.
Yeah, Hi, Chris This is ware.
And we.
Did get some higher yield and some price increases.
Aligned with some of the efforts, we talked about the increase or improve the efficiencies and the engagement on the financial services side, and then of course market conditions on the property and casualty.
<unk> assurance side or it's a strong market. So there are some increases there as well.
And we typically would say and I don't think this has any anything unusual for the first half of this year about half of the increase is due to volume and just increased activity, whereas about half of it.
It is due to pricing increases I think that's the case here for the first half this year.
Got it very helpful. How much revenue did the divested wholesale insurance business you know how much was that generating on a kind of trailing 12 months basis.
Yes, Chris this is where again slightly.
<unk> and $3 million.
It's actually a pretty small non core piece of our business.
Got it.
And just the last 1 from me.
And the.
The University of Pittsburgh settlement so.
I know there is 1 other active case out.
The lateral of Tech partners I'm wondering if maybe you could kind of compare and contrast that to the University of Pittsburgh. For example, you know you talked about no real legal precedent, which was the big risk factor on the University of Pittsburgh very complicated.
And of any thoughts on the on the tech side.
Hey, Chris This is Gerry how are you.
Provide a couple of comments on that what I would say are very different facts and circumstances related to the PMC.
Compared to <unk>, the <unk> PMC clean was at its core and errors and omissions claim relating to work that we did.
Complex actually where the work we did on the pension plan.
There is the U.
The <unk> case actually as of clean.
By the purchaser of if you'll recall, our medical billing business some years ago and.
Again, very very different claims very different facts and circumstances and we believe we have.
As we as we've been.
Announced strong defensive to that claim and we will vigorously pursue those defenses.
Got it and I will leave it there and jump back in line. Thanks, guys.
Okay.
Again, if you'd like to ask a question. Please press Star then 1 of the next question will come from Marc Riddick.
<unk> with Sidoti and company. Please go ahead.
Mr. <unk> you are now and the podium perhaps your line is muted.
Hi, good morning.
Good morning, Mark.
And I was wondering if you could discuss a little bit around the.
And the announcements from around the new headquarters and maybe some of the things that are that are going into the that and then from a timeframe and and and.
And sort of how that might slow and now that the.
The press release talked about next next next September but I was wondering can you sort of give a little bit of color around the around.
And that in and what we could expect there.
Yeah. Thanks, Mark. So this is something we've been working on for a while we've been in our existing facilities for about 80 years and candidly.
Just the way that we work and the way that our our workforce comes to work and the way we collaborate with each other.
As change over that period.
I would of time and while we're very happy with where we are and enjoyed certainly the time that we spent here.
We were really excited about the opportunity to.
And to enter and to be a anchor tenant at a brand new facility state of the art.
We are actually at the table, helping to design that facility.
<unk>.
As the anchor tenant and it will allow us to really prepare for the next 20 years and what that work the way our workforce comes to the office the way that we collaborate with each other of the way that we collaborate with our clients, including the state of the art technology.
Workflow.
And the design and.
And the Workspaces that are within the facility so kind of across the board really just a great opportunity for us to do that you probably also saw that we received considerable support from the state of Ohio and from the local governments and we're really appreciative of that partnership as well so kind of everything.
They came together to allow us to do this and we're excited about what that means for us going forward.
And then the timing I guess is more.
So we're looking at the fall of next year.
And if I remember correctly.
Or are we sort of targeting.
Ah.
And from a seasonal standpoint, and certainly doesn't.
It would be after taxes.
And I was wondering if we should think about.
The potential disruptions or anything along those lines.
The consideration prediction.
Yes, Mark the time and Youre right its and the fall of next year, we don't have exact kind of move in date, but it will be the fall of next year of the.
The only kind of potential disruption and I think its pretty insignificant, particularly in light of what we've learned over the past year is that there will be some GAAP between the time that we lead this space our existing space and the time that the next phase will be available, but we're working through that now and the combination of flex space, which is.
Which is available in our local market.
And some <unk>.
<unk> remote work will allow us to bridge that gap, so really no no bearing material bearing on the business.
And the move that we can see right now.
Okay, Great and then I was wondering if you could spend a little time talking about you touched on this and your prepared commentary about his wife.
Expand a little bit and maybe some of the.
And the progress you are making it could certainly from the numbers and certainly seems as though it's positive but.
And just some of the benefits of here.
And Youre getting from your from your marketing programs, whether it would be the sort of the digital outreach that was the ramped up during the pandemic and maybe we're seeing the benefits.
Of that as well as Uh huh.
Further progress.
Progress.
That's made with some of the those new contacts and then maybe you could also talk a bit about.
How we should think about or how you feel your local market share has and has progressed during the day.
And the course of the the challenges.
Thank you.
Sure. Thanks Mark.
Like many businesses, we learned a lot over the past 16 months right and 1 of the things I think that has been most beneficial to us is our ability to provide really our value of our unique value proposition, which is breadth of services and depth of expertise and a way that the.
Candidly.
That's a sort of and experience before the before Covid. So and example of that is.
When we sit with the client and our clients have multi disciplinary needs.
The pre pandemic oftentimes, we would have the slide people in from around the country of the experts of subject matter experts to sit with our clients and sit with our team the salt to solve whatever.
We had the user opportunities the client was working on to day through the virtual tools that we've all learned to adopt that's much easier to do our clients are far more receptive to that and we are far more comfortable providing services and that way.
As far as digital is concerned.
We reached out to our clients.
<unk>.
And as the outset of the pandemic.
As we talked about on earlier calls very frequent webinar programs and trying to anticipate what was the front of mind for them. What they are of greatest needs were and putting programs in front of them and that effort and has continued.
Also learn to follow up with our clients using.
And those digital channels and digital outreach and <unk>.
Ways during the pandemic and that effort has continued as well and as a result of that the top of the funnel for our sales pipeline.
And is not been this full and many many many years so not only have we learned to.
And to identify opportunities.
And put them in the top of the funnel, but also to convert those opportunities to sales and.
And our hybrid approach some face to face, but certainly some from more virtual so and we're learning the close of those opportunities as well. So we've learned a lot we continue to learn but the.
The the future looks very promising and all of those.
Regarding the very encourage and thank you very much.
As a reminder, and we'd like to ask a question. Please press Star then 1.
Again that is star and then 1 if you would like to ask a question.
At this time there are no further questions from the question queue. This will conclude today's question and answer session and I would like to turn the conference back over to Jeremy <unk> for any closing remarks.
Thank you Sean before I conclude the call today I want to put our performance for the first half of this year and the context of our business model and what we believe these results mean for the.
The rest of the year and beyond.
Over the last several quarters I've emphasized the fundamental attributes of our business model Inc.
<unk> the of central and recurring nature of our services, our high level of client retention year over year the.
The diversity of our client base in terms of size and industry and our broad geographic footprint.
As we've demonstrated.
Demonstrated over the last 16 months these attributes allow us to perform well even in uncertain economic conditions.
Moreover, the breadth and depth of our services puts us in a unique position to be responsive to our clients needs, especially when they require a coordinated multi disciplinary approach.
I've talked about the importance of our model because of the strength.
Ability of the offers in both good and less favorable economic conditions.
The extraordinary results we reported today are a testament to this model.
But also demonstrate the potential of our business moving forward.
For the first half of 2021.
And all of our service lines are growing many of the rate we have not.
And switching gears.
And these results we are seeing the return on our long term investments, we've made and our people tools and systems.
We're also seeing the value, we bring to our clients and both new ways.
But also and the services and solutions they rely on year over year.
And of course, our team continues to be the driving force.
Behind these results the.
The energy and commitment of our team and their willingness to go above and beyond for our clients and each other is evident and our performance.
And I'm incredibly proud of what we've accomplished and the first half and even more excited about what is possible as we look ahead.
Based on our strong performance year to date.
We increased.
Our revenue guidance today, and we are guiding adjusted EPS growth of at the high end of the 12% the 15% range that we previously announced.
For the reasons were outlined earlier, we are not yet prepared to increase our adjusted EPS guidance.
But remain optimistic given the momentum and our business and we look forward of revisiting this at the end.
Per quarter.
I want to close by thanking our analysts and our investors as we always do for your continued support.
And I'd also like to take this opportunity to invite our analysts and shareholders to participate and our virtual Investor conference to be held in September.
That will include deeper dives into our business operations and culture.
In addition.
And of the <unk>, with where and I and some of our business leaders.
You will be receiving an invitation and more information in the coming weeks.
Thank you for your time and have a great day.
The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.