Welcome to the CBIZ Second Quarter and First Half 2012 Results Call. The conference has now begun. The host for today’s call will be Steven Gerard, Chairman and CEO of CBIZ. All participants are muted and there will be a question-and-answer session at the end of this call. At this time, I would like to turn the call over to Steven Gerard. Thank you.

Thank you, Joanna. Good morning, everyone. Thank you for calling into CBIZ’s second quarter and first half conference call. Before I begin my comments, I’d like to remind you of a few things. As with all our conference calls, this call is intended to answer the questions of our shareholders and analysts. If there are media representatives on the call, you’re welcome to listen in; however, I ask that if you have questions you hold them for after the call and we’ll be happy to address them at that time. The call is also being webcast and you can access the call over our website. You should have all received a copy of the press release we issued this morning. If you did not access it on our website, you can call our corporate office for a copy. Finally please remember, that during the course of the call, we may make forward-looking statements. These statements represent management’s intentions, hopes, beliefs, expectations, and predictions of the future. Actual results can, and sometimes do, differ materially from those projected in forward-looking statements. Additional information concerning the factors that would cause actual results to differ materially from those in the forward-looking statements is contained in our SEC filings, Form 10-K and press releases. Joining me on the call this morning is Ware Grove, our Chief Financial Officer. Prior to the opening this morning, we were pleased to release our second quarter and 6-month financials. As you will note, our revenue in the second quarter for both our core Financial Services and Employee Service groups were up quarter-over-quarter, and they are up for the 6 months compared to the prior year of last year. We continue to witness as we had indicated some softness in our MMP business. I will talk about that in a minute. We also continue to invest in our business, which caused the degree of lumpiness in our expenses and we’ll highlight that for you in a minute also. So, I’d like to turn it over to Ware to give you the detail and then I’ll come back and give you some overall analysis of the market we’re seeing and where we are in some of our other initiatives.

Okay. Thank you, Steve, and good morning, everyone. As is our normal practice, I want to take a few minutes to run through the highlights of the numbers we released this morning for the second quarter and for the 6 months ended June 30, 2012. We were very pleased to report that total revenue for the second quarter increased by 2.8% or by $5.1 million and for the 6 months ended June 30, 2012, total revenue increased by 4.0% or by $15.9 million. Within our core Financial Services and Employee Services groups on a combine basis, total revenue grew by 5.1% in the second quarter and grew by 6.7% for the first 6 months. As Steve commented, as we expected, we continue to face challenges achieving revenue growth within our MMP or Medical Management Professionals group due to continued pressures on reimbursement rates combined with the competitive pricing environment. And revenue within this group declined by 3.5% in the second quarter and declined by 4.8% in the 6 months. Our same unit revenue in total declined by 1% in the second quarter with acquisitions contributing $6.9 million or 3.8% to revenue growth. For the 6 months, same unit revenue was flat compared with a year ago. As I commented, revenue declines within our Medical Management Professionals group negatively impacted our total organic growth. Within our National Practices segment, it should also be noted, that in the first half of last year, 2011, we reported several transactions within our mergers and acquisitions advisory business, and these have not occurred yet this year. This negatively impacted same unit revenue by approximately $786,000 in the second quarter and by approximately $1.5 million for the 6 months ended June 30, 2012 compared with the prior year. Our same unit revenue within our Financial Services…

Thank you, Ware. Let me highlight a few things that Ware mentioned. We typically don’t talk a lot about our investment in our businesses and our people that are not acquisition related. The reason we highlighted the investments we’ve made this year in our financial services group is that we’re seeing a stable environment there. We’re seeing organic growth in both the first quarter and the second quarter and we believe that the market in the financial services group has flattened out and is starting to grow. As Ware pointed out we invested in the first 6 months and expensed in the first 6 months, $1.2 million for that group to acquire professionals in our litigation support, property tax and tax business, all of which are good investments for the future. So we are very pleased to have those people aboard and we think that over the next 12 months, the revenue that they will be generating will certainly be very significant for us. And as we look at the economy for the second half of the year, I think the best thing we can say is it’s going to be flat, not likely to go up dramatically. And we don't imagine it’s going to go down dramatically. We’re seeing a greater level of interest from our clients as a result of the Supreme Court decision on the Affordable Care Act. That dialogue gives us an opportunity to talk to them about other products and services as help -- as well as help them find their way through the rather confusing environment we have today in terms of healthcare and that’s a positive sign as well depending on what Congress does with the tax law by the end of the year, may give us even more opportunity to talk to our clients. As Ware mentioned, we have completed 3 or 4 transactions this year in terms of acquisitions in the pipeline for both financial services and employee services continues to be very, very strong. So we are encouraged that the results of the second half of the year may receive a benefit from future acquisitions, none of which are in a position to be announced at this time. Ware gave you an extraordinary amount of detailed information by each of our businesses including the margin. So what I’d like to do now is stop and take questions from our analysts and shareholders and then come back with some concluding remarks.

[Operator Instructions] And our first question is from Vincent Colicchio with Noble Financial Capital Markets.

Steve, you said your -- I think Ware said the HR consulting and recruiting business is doing well. What would you attribute that to? It seems that the labor markets aren’t too healthy these days.

Well, Vince, the HR and recruiting business that we have is really being driven by our executive placement business and our compensation survey business. It’s not necessarily being driven by more traditional HRL Outsourcing. So we are fortunate to have really world class people in both those businesses and they are producing very, very well for us this year.

Could you give us a little more color on what’s going on with the continued pressure on the reimbursement rates in MMP?

Well, they haven’t gone down any further than the first half. I mean, we saw significant continued cuts in radiology. As you know, radiology was some 56%, 57% of our total volume there. That impact is going to be with us all year and we guided that since our first quarter release. We are seeing quite frankly a slight pickup in procedures, which is positive for us. It is about 2% pickup in total procedures year-over-year but we've given it back in terms of reimbursement rates and as the reimbursement rates are affecting the doctor groups themselves. They are renegotiating contracts and we are finding that the fees that we are getting for our services are actually going down and that’s a competitive pressure that I would expect will continue certainly through the rest of this year. So with respect to the non-radiology business, they are doing just fine. Procedures are also up there and pathology in some of the other factors -- some of the other areas of specialty but the real concern or the real issue for us is the concentration of radiology and the previously announced reductions as well as pricing pressure from our competitors.

And our next question is from Josh Vogel with Sidoti & Company.

I guess, I’m trying to get a handle on what would get you to the high end of your EPS guidance range versus the low-end. And I know you talked about some investments in financial services. I know you also talked about legal expenses hitting up. Are you expecting that those pressures or those costs are going to ease significantly in the back half of the year?

I believe it’s hard to say. We are very successfully managing a number of very large cases. If we are successful in getting rid of them sooner rather than later than the legal fees will come down in the third and fourth quarter. If we’re not successful in getting rid of them and we have to go to the next step which we’re certainly prepared to do then the legal expenses will continue. So I can't call that right now. In the largest case that we’re dealing with, we’ve got motions for judgment to get us out of the cases. You may recall from prior conversations that these are cases having to do with audits that were done by Mayer Hoffman McCann. You’ll remember we don't do audits. So we have historically been successful in getting out of these, but until we’re out, we’re not out. With respect to the $1 million or more than we spent in the financial services business, I expect that to be revenue coming in, in the second half. But I don’t expect it to be a significant mover to get us to the upper end of the range. In order to get to the upper end of the range, we’re going to need a combination of the number of projects that we are working on, a couple of our very successful business units continuing to outperform where we thought. And then the incremental impacts of whatever acquisitions we may do or just appreciating that the contribution for the rest of the year whenever we would to close them it’s really going to not be significant. It will just help us get there. We looked really carefully at the guidance, with respect to should we -- should we be more conservative. And I think you know we’re reasonably conservative company. The fact of the matter is, is that we incurred some significant expenses in the first half and as Ware pointed out, we had no M&A transactions in the first half. We’ve now completed at least one in July. So, there are enough things out there that suggest that we can hit well within the range, which is why we’ve continued our guidance.

Okay. That’s helpful. And Ware talked about some efficiencies with regard to engagements in financial services doing more with fewer resources, is this more due to just better people or have you upgraded infrastructure there, just basically trying to get a handle on, where these efficiencies is coming from?

So, in the last 2 years, we’ve installed a new system for process for audits that was installed by Mayer Hoffman McCann and a new tax software. The combination of that and a more experienced employee base, has caused us to put -- to put less hours in per client, but to make more money on a yield basis. So I think it’s a combination of greater familiarity with the client plus the operating improvements that we invested in and we made. What we are not yet picking up and we’re talking about softness in the business, it’s not a question of where we were 2 years ago with respect to softness opposite the work we’re doing for the client. What it is, is we are now putting in less hours to get the same work done. But we are not yet -- the market is not yet receptive to take those extra hours and turn them into even more incremental business. So, I would call the accounting business in general and this is substantiated by what comes out in the industry as being better than flagged, it’s up a couple of percentage point across the board and I think that’s what we are seeing.

Okay. And you talked about being opportunistic with regard to share repurchases. And I know you have an option out there with the DeGroote family for the remaining 7.7 million shares. I think that the price is at seven and a quarter. I was curious if you had any dialog with them that possibly brining down that potential option or extending it beyond the September 2013?

There has been no discussion with Mr. DeGroote about the option. And I think that as we sit here today the best use of our valuable cash is to reduce debt and to make the right acquisitions. So I don’t -- at this point envision us initiating any discussion to see if we could get the option at a lower cost. If you look at the option itself that’s a $50 million plus investment even if you took down $1 or $2, it’s still a significant investment. And we’re seeing too many opportunities to build for the long term. So, we’re not going to initiate that conversation. And I have had no conversation with him initiated by him on this issue.

Okay. And just lastly, where I missed the -- earn out payments, or perspective earn out payments that you listed before. Can you just give those to me again?

Yes. Let me tell you next year approximately $10.9 million or $11 million. In 2014, approximately $5 million or $5.3 million and in '15, approximately $4.5 million.

And at this time, there are no further questions in the queue. Gentlemen, I apologize. We’ve just received another question from Eugene Fox with Cardinal Capital Management.

I just wanted to clarify something, when I look at your accounting and tax business, it looks like your -- it grew, it was more profitable in the first quarter. You had positive margin -- more positive numbers and margin was essentially flat. But there was a negative margin comparison in the second quarter. Was that because there was incremental spending or was there anything else there and Steve, I thought that this -- I thought I heard 2 different things that there was about $400,000 in each quarter and then you said there was $1.2 million, so maybe I missed something.

Yes, Gene. This is Ware. Remember, this is a very seasonal business and traditionally year-end audit and tax work is focused in the first quarter. So, relatively speaking that’s got to be a higher margin quarter than the second quarter, which is still healthy and then it falls off dramatically in the third quarter and starts to bounce back in the fourth quarter. So, it’s not unusual to have a lower margin against your cost in the second quarter, just because of the seasonality of the revenue. The expenses we’ve talked about, I gave you the expenses net of the revenue. Steve talked about the investment itself. So the expenses net of the revenue and by the way the revenue was somewhat modest and to our point have been improving second half results as this revenue ramps up vis-à-vis the investments. It was approximately $800,000 in the first 6 months net of the revenue generated. And Steve commented about roughly $1.2 million, $1.3 million. So, it’s gross investments or expense year-to-date. Now, in the second quarter, the net impact, net of revenue again was approximately $433,000 impact in that group.

Right.

I hope that answers your questions.

It does. But I guess the -- when I look at the number there are still, if I am right and Rob’s calculation is right, which is about $1.3 million profit differential. And I know, I guess the business can be lumpy quarter-to-quarter. So, it wouldn’t have explained all of the decline in profit. So, just more, is there anything else so we should pay attention to rather than just a general lumpiness of your business on a quarter-to-quarter basis?

Yes. I think I would describe it more as seasonality as opposed to unpredictability or lumpiness just because of the leverage impact of the underlying expenses. So you’re going to get some compression in the second and third quarters versus the first quarter.

And gentlemen, once again, there are no questions in the queue.

Okay. Well, just before we ramp up, I’d like to thank everybody for calling in. This was a tight quarter for us and we are encouraged by the revenue growth that we’re able to post. We recognized that a significant amount of it across the board comes from the acquisitions. But we do look positively on the contributions of our financial services group. We do believe that some of the unusual expenses are behind us, which is why we reiterated guidance. So for the shareholders and analysts, thanks for your support, and for our employees keep up the work, we’ve got another 6 months and a little bit of an uphill battle to get there, but I am highly confident that we will. With that, I’d like to thank everybody and sign off.

Ladies and gentlemen, this call has concluded. We thank you for your participation.