Q2 2023 CBIZ Inc Earnings Call
Good day and welcome to the CBS SEC.
Second quarter and first half 2023 results conference call all participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one.
On a touchtone phone to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Lori <unk> director of corporate Relations. Please go ahead.
Good morning, everyone and thank you for joining us for the second quarter and first half 2023 results conference call in connection with this call today's press release and quarterly Investor presentation have been posted to the Investor Relations page of our website <unk> Dot com.
As a reminder, this call is being webcast and a link to the live webcast can be found on our website.
An archived replay.
And the transcript will also be available after the call.
Before we begin we would like to remind you that during the call management may discuss certain non-GAAP financial measures reconciliations of these measures can be found in the financial tables of today's press release and Investor presentation.
Today's call May also include forward looking statements regarding our business financial condition results of operations cash flows strategies and prospects.
Forward looking statements represent only estimates on the date of this call and are not intended to give any future assurance of future results.
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 and see this assumes no obligation to update these statements a more detailed description of such factors can be found in our filings with the six.
Where do you see an exchange commission joining.
Joining us for today's call are Jerry Chriscoe, President and Chief Executive Officer, and Ware Grove, Chief Financial Officer, I will now turn the call over to Jerry for his opening remarks.
Thank you Laurie good morning, and thank you for joining us for today's call.
We are pleased to share our second quarter performance and discuss our outlook for the remainder of the year.
As I outlined on our last earnings call. We started 2023 with an exceptionally strong first quarter.
Which provided important momentum for the full year.
Overall, our business performed as expected for the second quarter with the exception of two areas.
First within our government health care consulting business, we experienced some unanticipated contract delays, including one significant project that is now expected to begin early next year.
Within that business, we expect the other significant project delays to be short lived and we'll work on many of those projects to commence later this year.
Second our traditional accounting and tax business was impacted by changes to tax filing timelines in California.
This work still needs to be completed and has been pushed into Q3 and Q4 this year.
The delay in work in those two businesses had a disproportionate impact on our earnings based on the cost of having trained experienced professionals available for that work were largely underutilized through the first six months of the year.
With those two exceptions, our business continued to perform well in the second quarter and demand for our services remained strong.
Now turning to the performance of our two primary practice groups, starting with our financial services Division where.
Where we experienced total revenue growth of 12, 2% and organic revenue growth of three 9% for the second quarter.
As expected demand for our core accounting and tax services remains strong.
We were also pleased to see continued strong demand for our advisory services, where the work tends to be more discretionary and project base.
As I mentioned, we experienced some contract delays in the second quarter within our government health care consulting business.
As a reminder, our.
Our clients for this business are primarily state government and the states dictate the timeline for the services that we provide.
We've been in the government health care consulting space for over two decades, and we've experienced similar contract delays from time to time in the past.
The business has always been able to recover and has demonstrated steady growth over time.
To that end the new business pipeline remains strong and we continue to see new opportunities for growth.
Within our benefits and insurance Division, we experienced organic revenue growth of four 5% for the second quarter with contribution to that growth coming from every major service line across the division.
For our employee benefits business, we saw strong production and increased service revenue with client retention well above 90%.
Employee benefits, our property and casualty insurance service line continues to experience high client retention rates.
Coupled with strong trend to fuel growth.
Our retirement and investment services business saw an increase in project work within our actuarial team, which contributed to our results for the second quarter.
Our payroll business also had a good quarter with strong production and increase in retention and new clients with our up market payroll platform and traction with fee increases among the factors driving growth.
We plan to continue to add producers during the second half of the year and recruitment efforts are underway now as we harvest our candidate pipeline.
Based on our performance for the first half of the year I am pleased to raise revenue guidance to improve 10% to 12% for the full year and to affirm adjusted fully diluted earnings per share guidance for the full year, two improved 11% to 13% over 2022 results.
With this I will turn it over to Ware Grove, our Chief Financial Officer to provide additional information on our financial performance for the second quarter and for the first half of the year where.
Thank you Jerry and good morning, everyone.
Let me take a few minutes to talk about the key highlights of the second quarter and year to date numbers. We released this morning.
Total revenue in the second quarter increased by $36 $6 million up 10, 1% over second quarter a year ago same.
Same unit revenue was up 15 point of $1 million were up by four 1% with acquisitions contributing another $21.6 million or 6% growth compared with last year.
After an extraordinarily strong first quarter as Jerry commented with two exceptions that I will detail in a moment the core business performed well in the second quarter and in the first half this year.
We previously commented on higher interest rate expense.
Expense headwinds this year and headwinds related to the increase in our tax rate compared with prior year.
In the first half reported increase in adjusted earnings per share was up 11% compared with last year.
Think of it is important to know that this rate of year over year growth in earnings includes a four cent per share impact of the higher tax rates and includes a nine cent per share impact from higher interest expense headwinds for the first half.
As Jerry commented two items disproportionately impacted second quarter results. This creates optics that may naturally raised concerns. So let me jump in and provide some additional detail behind what happened.
And the actions we are taking.
Many of you generally may be aware that the IRS granted a six months tax filing extension. This year that applies broadly to broadly defined areas within the state of California.
Due to flooding and severe weather conditions that occurred earlier in the year.
Our core financial services annual revenue in California is about $120 million and we expected that this delay in tax work could impact second quarter and first half results.
We estimate the first half impact at approximately four cents per share with most of this impact occurring in the second quarter as we carried staff during this period without the revenue.
This work will be done in the second half this year and of course this impacts the normal seasonality of first half versus second half results that is typical within our core financial services group.
The second item that impacted revenue and results in our government health care consulting business, which is approximately $185 million in annual revenue.
The impact was a result of delays in project work that primarily in factory second quarter results.
With hundreds of active engagements underway at any time. This business has been a steady performer and achieving revenue and earnings growth over many years from time to time for reasons beyond our control project work gets delayed.
Sometimes it can be a result of delays in the regulated contract renewable RFP process from state agencies due to administrative delays.
Where at times, our state agency staff is not ready with the information or the data necessary for us to perform the work as scheduled.
In the second quarter, we learned as a significant contract where the normal renewal cycle was expected to occur midyear. However, administrative delays are now pushing this renewal into 'twenty 'twenty four.
This business typically sees a steady pipeline of new or renewing project work with a very high percentage of project for proposals awarded to see this.
This year is no exception.
Our pipeline activity is healthy and has generated new project awards that are in line with expectations.
These new engagements onboard with normally served to smooth out and mitigate the impact of any delays that we may occasionally a counter but in this year. Many new projects have been slow to watch it.
In a manner similar to that I described for the delayed tax work in California.
The delayed and therefore lower revenue in second quarter caused a decline in earnings contribution from this business as we carry staff necessary to perform the work that was planned.
This impacted first half results by approximately approximately six cents per share and with approximately four cents per share attributed to the second quarter.
As West, California tax work this government health care consulting work does not go away, but will occur at a later date.
Looking at the second half of the year aside from the major contract that is now being pushed into 2020 for the newly awarded contracts either have started or are scheduled to start in the third quarter. So we are we are projecting relatively stronger results in the second half.
Yes.
As we project second half revenue in this business. We're also taking immediate actions to align costs with projected revenue.
As a result for this business group, we expect to achieve growth in revenue and earnings for the full year.
Over time this business has grown annually at high single digit rates.
Driven by pent up post pandemic demand organically revenue in this business grew approximately 13% last year. So this year in 2023 the year over year comparison presents a challenge.
Okay. So with these comments I provided a level of deeper information on these two second quarter items that we referenced and I can shift comments back to see this.
For the six months. This year total revenue grew by $99.4 million up 13, 2% compared with last year same.
Same unit revenue for the six months grew by $53 $9 million were up by seven 2% with acquisitions contributing $45 $5 million or 6% to revenue growth for the six months this year compared with last year.
Within financial services for the second quarter total revenue grew by $31.6 million up 12, 2% and.
And same unit revenue for the second quarter was up three 9% were up by $10 million with revenue growth recorded within traditional core accounting as well as advisory services.
For the six months total revenue within financial services grew by $86 million up 15, 7%.
Same unit revenue for the six months was up seven 4% with high single digit revenue growth for our core services and a similar high single digit growth recorded International Advisory services.
Within benefits and insurance for the second quarter same unit revenue grew four 5% and for the six months same unit revenue grew by six 4%.
We continue to see strong client retention and strong new client production.
The investments we've made in recent years to hire new business producers has gained traction as we are seeing increasing new business production.
We remain committed to further enhancing growth within benefits and insurance and we continue to make investments in hiring additional producers.
As previously disclosed earlier this year, we acquired Somerset C P A's and advisors in February of 2023 with.
With estimated annual revenue of approximately $55 million.
In 2023, we expect to record approximately $52 million of revenue from this acquisition.
We're extremely pleased to have the Somerset team on board and at this early stage of the newly acquired business is performing well.
There are transaction costs and closing costs, plus one time integration related expenses associated with this transaction.
In a similar manner that reported from Mark's patent acquisition related costs last year, we were reporting an adjustment to eliminate these acquisition related costs from GAAP reported results. So that we can report adjusted results. This year you will find a reconciliation of these items as a schedule included in the earnings release.
With a view towards presenting meaningful comparable information.
Eliminating the impact of the items I already commented on.
Which are the two factors impacting second quarter results. So you have a better understanding.
For the six months.
I said earnings per share this year is $2 and one set up 11% compared with adjusted earnings per share of $1 81 last year.
Adjusted EBITDA, considering these same adjustments.
$167 $8 million for the six months this year of 12, 9% over adjusted EBITDA of $148 $6 million a year ago.
We have previously talked about the level of health care and benefits.
Raul and entertainment expenses and marketing expenses that are normalizing to higher levels.
These expenses collectively are 140 basis points below pre pandemic levels of 2019, but we continue to see year over year impacts as these expenses normalize.
For the first six months of this year. These expenses represented a 60 basis point headwind to margin on income before tax compared with a year ago.
We continue to project that these expenses will settle in lower than pre pandemic levels, but for a period of time the year over year comparison presents a headwind.
For the second quarter, we reported an increase in interest expense of $3 $9 million and that impacted earnings per share by approximately <unk> <unk> per share.
And for the six months, we reported an increase in interest expense of $6 $3 million that impacted earnings per share by approximately nine cents per share and this is a headwind to margin of approximately 65 basis points.
As always details of the impact of accounting for gains and losses in our nonqualified deferred compensation plan are outlined in the release.
Because we are comparing a period in 2022 with capital markets losses, compared with capital markets gains. This year. There was a significant impact to the GAAP reported numbers as you look at both gross margin and operating income.
As a reminder, pre tax income margin is not impacted by this accounting.
Turning to the cash flow items on June 30th this year the balance outstanding on our $600 million unsecured facility was $410.6 million with about $178 million of unused capacity.
The balance sheet on June 30th this year are strong with leverage of approximately two times adjusted EBITDA, which provides plenty of capacity to continue with strategic acquisitions and provides the flexibility to continue with the share repurchases.
And the first six months this year in addition to the Somerset acquisition discussed above we completed.
Total of four acquisitions, which includes two smaller tuck in acquisitions we.
We used approximately $84 $2 million for these acquisitions as well as earn out payments on previously closed transactions.
We expect to use $26 $2 million over the remainder of this year and approximately $61 million next year in 2024, $35 $6 million in 2025, and another $10.6 million in 'twenty 'twenty six for these estimated earn out payments.
Deploying capital for strategic acquisition purposes continues to be our highest priority.
Since the end of 'twenty 19, we've closed 20 transactions and we have deployed approximately $365 million of capital for acquisition purposes, including the earn out payments over time.
Through June 30th this year, we have repurchased approximately 975000 shares of our common stock in the open market at a cost of approximately $48 $5 million.
To recap purchase repurchase activity in recent years since the end of 2019, we have repurchased approximately nine 1 million shares and that represents slightly more than 16% of the shares outstanding compared to the end of 2019.
Approximately $325 million of capital has been used torches open market repurchase activity over that period.
Days sales outstanding on June 30. This year was 89 days compared with 88 days the first six months a year ago.
Bad debt expense for the first six months was nine basis points of revenue this year compared to 17 basis points a year ago.
Depreciation and amortization expense for the second quarter was $9 $2 million compared with $8 $3 million last year.
Year to date, depreciation and amortization of $17 8 million versus $16 $5 million last year.
For the full year, we expect depreciation and amortization at approximately $36 million compared with approximately $33 million last year.
Capital spending for the second quarter was $8 $1 million.
And is $11.7 million for the six months Gray.
Greater spending as planned this year for tenant improvements related to our upcoming move to our new headquarters facilities.
And any year most of our capital spending is associated with leasehold improvements and furniture for office facilities.
As a reminder, we are a major tenant in our new headquarters building with a long term lease and a move to the new headquarters as planned later this year, we are not an owner of the building.
For the full year this year, we're expecting capital spending to be approximately $15 million to $20 million.
The effective tax rate for the six months. This year was 27, 6% up from 26, 3% a year ago.
The increase in the effective tax rate is primarily a result of exploration of certain grandfather tax benefits that were associated with stock based compensation, that's provided and the tax reform Act of 2017.
The impact of the increased tax rate in the first half was approximately four cents per share with.
With a forecasted full year effective rate of 28%, we expect the full year impact at approximately eight cents per share.
The increased effective tax rate in 'twenty three is a headwind that is unique to this year compared with 2022.
In future years, we expect the effective tax rate to be relatively level at approximately 28% and we project no further year over year headwinds beyond this year.
The recurring and the central nature of many of our services provide stability through economic cycles.
At this point as we look at employment driven metrics within our benefits and in our payroll business. We are seeing continued signs of steady employment within our clients.
Economic uncertainty continues however, and if we were to experience more sustained pressure on revenue growth. We have a number of variable items in our cost structure and we can take measures to mitigate the impact.
The tools and systems, we have put in place in recent years have enabled us to increase pricing and keep pace with underlying cost pressures, we can leverage costs and protect margins.
The investments we made are continuing to make in new business producers, particularly focused within our benefits and insurance group have gained traction.
And we are seeing strong new business, coupled with strong client retention and that is driving revenue growth.
Now before I turn it back over to Gerry I.
I want to provide you with our thoughts on full year guidance.
Even with the impact of the two items, we talked about first half results are generally in line with initial expectations.
With a reported 11% increase in first half adjusted earnings per share the impact of increased interest expense was nine pennies per share and the impact of higher tax rate was four pennies per share.
Absent. These factors you can do the math and you can see that operating results, but generate a much higher growth rate in earnings I think that tells you that our core business within both financial services and benefits and insurance are performing very well with strong first half results.
Looking at full year in the second half with a focused actions. We are taking we projected recovery of the two second quarter factors that we described earlier, we typically target a 20 to 50 basis points improvement in pretax margin each year, but in 2023, there are headwinds for all the reasons that I outlined.
So to recap our full year guidance, we will say the following.
Increasing our guidance on revenue growth, we expect total revenue to increase within a range of 10% to 12% for the year up from 8% to 10% previously.
On an adjusted basis, we expect 2023 adjusted earnings per share to increase within a range of 11% to 13% over the adjusted earnings per share of $2.13 that was reported last year.
GAAP reported earnings per share is expected to increase within a range of 15% to 17% over the $2.01 reported in 2022.
The effective tax rate for the full year of 2023 is expected at approximately 28%.
Now this could be impacted either up or down by a number of unpredictable factors.
And lastly, the fully diluted weighted average share count is expected within a range of 55 to 51.0, sorry in shares for the full year of 2023.
So with these comments I'll conclude and I'll turn it back to Jerry Thank you Ware.
Like to provide a brief update on our M&A results for the second quarter and for the first half of the year.
During the second quarter, we completed another strategic acquisition to be included within our financial services Advisory business and a small specialty tuck in acquisition to be included within our accounting and tax business.
Among them is pivot point security.
Cyber and information security firm based in New Jersey.
We've been searching for an acquisition in this area for a long time.
We are pleased to have found a cyber security firm that will enhance our advisory service offerings and bring added expertise in this area to our <unk>.
In addition to pivot point during the second quarter, we added a small boutique CPA firm specializing in the spoke services and solutions for high net worth individuals business owners and executives.
The firm joins our growing team in the Denver market.
In addition to this activity during the second quarter earlier. This month, we acquired American pension advisors, a small firm based in Indianapolis that provides full service retirement plan consulting to assist their clients in the design implementation and administration of all types of retirement plans.
P. A joins our retirement and investment solutions line of business within our benefits and insurance Division.
This acquisition also adds to our presence in the fast growing Indianapolis market, where we acquired Somerset.
A leading CPA and advisory firm earlier this year.
These recent acquisitions bring us to three acquisitions in two tuck in acquisitions, so far this year.
Each of these acquisitions are strategic in its own right and enables us to continue to deliver on our goal of providing our clients with a breadth of services and depth of expertise that is unmatched in our industry.
Our M&A M&A pipeline remains healthy enacted and we have the capacity to pursue other opportunities in the future.
With that we'll move onto Q&A.
Okay.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
We're using a speaker phone please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Our first question comes from Andrew Nicholas with William Blair. Please go ahead.
Hi, good morning, and thanks for taking my question I appreciate.
All the color on the two delays in the quarter.
Where I just one one quick follow up there on the government health care consulting side. It sounds like the majority of that is expected in the back half, but I think he did call out a bigger project that bleeding into 2024 is there any way to size.
The impact of that delay specifically.
Okay.
No we havent sized that if not insignificant so Andrew that's why we commented that we need to align the cost structure with the expected second half revenue and we're doing that are immediately as we speak.
Understood.
And then maybe a bigger picture.
Question on on the cyber opportunity I know you guys have been talking about being interested in that space for some time can you just kind of refresh us on on that opportunity, how pivot point fits into that that strategy and whether or not this is kind of a one and done acquisition there.
Or if there could be bigger chunkier deals that you'd like to do here because it seems like an area that's been quite a bit of demand.
Andrew This is Jerry Yeah precisely as you indicated this is a space where we've had high client demand we have some capabilities in this area, but the demand is historically outstripped our capacity we've looked for a long time for the right firm. There are a lot of firms out there that purport to be expert in this space that.
That didn't hit our quality standards. So we are thrilled to be able to bring in pivot point when you ask.
About.
Future plans, we will continue to look for opportunities to expand in this space, if if and when we find other firms have the same quality what they do they.
They will fit in with our within our advisory practice on the financial services side work very closely with our specifically with our risk and advisory services. They assess vulnerability they consult around that vulnerability and they make recommendations as to how to mitigate it.
So.
Spot on with regard to what we're hearing from our clients and what their needs are.
Understood and then if you wouldn't mind me squeezing in one last one which is kind of a insist.
Consistent question each quarter, which is just kind of on the M&A front. It sounds like the pipeline is still active in and there's a decent amount of capacity any any notable change in terms of the pricing in that end.
And market them as as we continue to see quite a bit of activity from your competitors there.
Yeah, Andrew we have not seen really any material change in the pricing, although what we're hearing in different industries is that pricing is softening a little.
Because of the interest rates and just the impact on the financial buyers that being private equity, we've not really seen it to date in.
In the in the assets that we're looking for are looking at.
But we're keeping an eye on that but you know listen for premium.
Opportunities premium firms I don't think there's any.
Theres any pricing bargains out there we don't look for those.
For bargains, we really look for quality firms that are going to be great cultural fits but but on the encouraging note at least pricing seems to have.
Seems to have stabilized for the time being.
Great. Thank you.
Our next question comes from Chris Moore with CJS Securities. Please go ahead.
Hey, good morning, guys. Thanks for taking a couple.
Obviously, you talked quite a bit about the government health care project revenue.
And maybe just beyond that how would you characterize the momentum within the project revenue outside of the the the government health care space.
Yeah, Chris This is Gerry remains very strong.
We're very encouraged by it.
You know DNA.
Less certain economic environment, the portion of our business that tends to be a little bit more difficult to predict is around our project based advisory services, what we've experienced through the first six months as demand for those services still remains very healthy.
There is a little bit of a different mix, particularly on the private equity side.
The equity advisory side, fewer really large projects, but but largely offset by.
By a larger number of smaller projects. So remain very encouraged by what we're seeing there.
Remain.
Optimistic about the second half of the year, where you want it yes, Chris I can just add a couple of things.
Clearly the government health care and to some degree the deferrals and the tax return work and California impacted.
Second quarter first half results.
If you look at our same unit revenue, which I think addresses your question. How is the rest of the business doing well we reported in second quarter of four 1% same unit growth.
Adjusted to eliminate those items it would be six 2%.
And for year to date, we reported seven 2% organic growth and eliminating those items that would've been 9%.
To us and I hopefully to you that's a very strong indication that the balance of the business is very healthy.
Got it very helpful.
I pricing certainly had been more dynamic in 2022 can you talk maybe a little bit more about the pricing in the first six or seven months of 'twenty. Three is it more normal you know, 2% to 3% price increase early in the air and that's it or or.
Just help.
Help me understand that how the pricing is working these days.
Yes, great Great question Chris.
Just again, eliminating the impact of government health care and financial services, where pricing is more dynamic the first half.
Organic growth was reported at 7.4, it would've been 10.1 without government health care consulting now that's about still 70, 80% driven by pricing.
So we're continuing to get pricing and <unk>.
Absent a couple of things we talked about we're.
We're optimistic about margins. Despite the headwinds we're facing that are kind of unique to 2023.
Got it very helpful. I'll leave it there I appreciate it guys.
Our next question comes from Marc Riddick with Sidoti. Please go ahead.
Hey, good morning, everyone.
Good morning, Mark Hi, Mark.
So I wanted to touch a little bit and I. Thank you for all the color and detail that you provided on an on everything so I don't want to sort of go a little bit more big picture here and I'm wondering if you could spend some time talking a little bit about some of the trends that you may be seeing from your customers, whether you know, particularly.
Or industry verticals that that might be a call out or or a particular green shoots that we might be seeing in the economy that that if.
Evolved during the course of the year.
Yeah, Mark consistent with the headlines that everybody is reading.
The small middle market businesses continue to actually perform quite well in this environment and.
And continue to be quite optimistic about that.
The rest of the year and kind of beyond that.
I would predict we we survey as you know.
We survey our offices in our practice groups quarter.
Quarterly in anticipation of this call and that's really what we're hearing there are a couple of notes of course, a caution you know rising interest rates and access to credit et cetera, but but not to the.
Not to the level of concern where they think it's going to have a material impact on their business.
Okay, Great and then I was wondering if you could touch a little bit about or comfort level around leverage I guess with the acquisitions were about a point with the slide deck looking at about two times can sort of remind folks kind of your.
Large large scale views as far as leverage levels and comfort levels and then you know what you might be thinking about going forward there.
Yeah leverage is said this is where thanks Marc for the question.
Leverage is at about two times adjusted EBITDA, and we have about $178 million of unused capacity against the 600 million dollar facility just to remember the seasonality of cash flow. We've spent $85 million in the first half on acquisitions plus another $48 million.
In the first half on share buybacks.
Seasonally we don't really generate.
A lot of positive cash flow in the first half so the positive cash flow comes in the second half as the seasonal work done in the first half converts to cash. So we think we've got plenty of capacity.
And we remain a very actively engaged in potential acquisitions, and we've got the flexibility to do share repurchases.
Okay, Great and then the last one for me is why you can sort of give us a bit of an update as to your investment expectations around maybe head count or technology spend and the like outside of the the moving into the offices and the like is where I can sort of give maybe an update as to what your what your plans or maybe for the remainder of the year.
Sure.
And that type of investment.
Yeah, I would say mark nothing beyond what you've traditionally seen there I mean, we are always in the market looking for.
Best in class talent right. So we continue to have a an active recruiting effort always going on with that said in certain areas, where the business is softer obviously, we'll pull back on that hiring as far as technology is concerned.
We've made substantial investments in that area. We continue to make substantial investments. There is a lot of a lot of developments that are happening in our industries and we feel like.
We're at the right level of spend which is really consistent with what you've seen over the past couple of years, where yeah. I think the investments in people incrementally has been coming and we will continue to come on the new business development front, both on the financial services, but particularly focused on benefits and insurance. So we'll continue.
That and to some degree that that presents a little bit of a margin headwind on top of the things we already talked about but I know you know you and others have seen the headlines of the risks and the other things announced with the big four and our take on that and the information they've shared with us.
Is that I believe they probably over hired last year, we've stayed pretty carefully aligned and we're not really a misaligned other than you know a few of corrective actions, we need to take particularly focused on government health care. So I think we're good to go and we're not really a mess aligned on a talent in.
A head count basis.
Excellent. Thank you very much.
This concludes our question and answer session I would like to turn the conference back over to Gerry and Chris Koch for any closing remarks.
Okay. Thank you before I go to my traditional closing remarks, I just want it because of the way. This quarter played out I just want to caution again against predicting quarter results for us really for two reasons the nature of our business and you saw it in the second quarter is at work can get accelerated as it was in their first quarter.
<unk> or it can get delayed as you saw in the second quarter. When it's delayed of course, we have the labor costs that are there.
Ready to do that work and so.
The impact on earnings is exaggerated or exacerbated.
The second factor is that as you know we've been very successful Fortunately in bringing out some some terrific firms, but to the extent that their core accounting firms that creates even more seasonality. So you'll see you know higher revenue higher earnings in the first half of the year.
But maybe a little bit less and then even quarter to quarter in the third quarter or fourth quarter.
That work is a little bit more difficult to predict all of which is why we don't predict.
Quarters.
With all of that said the business remains very strong as ware indicated from an O G IR perspective.
We would've had.
Substantially higher <unk>, if you just exclude those those two items and we are in fact.
Based on our results through the first half very pleased to be able to raise our revenue guidance for the rest of the year and to hold our EPS guidance beyond that so beyond 2023.
Still committed to our 8% to 10% topline growth and 6% to 20% kind of double that on an EPS growth. So very pleased with the business the way it performs.
And I'm very pleased the way it has performed through the first six of the months.
With all of that as.
As we wrap up I want to thank our shareholders and analysts as we always do.
For your understanding and your support of the business and most importantly, I want to thank our team for the FERC very solid in our first year of our first half year results for your focus on providing exceptional service to our clients and equally important for your support of our team at each other.
Thank you very much and we look forward to talking at the end of the third quarter.
The conference has now concluded.
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