Welcome to the CBIZ Third Quarter 2012 Results Call. This conference is now begun. The host for today’s call will be Steven Gerard, Chairman and CEO of CBIZ. [Operator Instructions] At this time, I would like to turn the call over to Steven Gerard. Thank you.

Thank you, Johanna, and good morning, everyone. Thank you for calling in to CBIZ’s third quarter results conference call. Before I begin my comments, I’d like to remind you of a few things. As with all of our conference calls, this call is intended to answer the questions of our shareholders and analysts. If there are media representatives on the call, you’re welcome to listen in; however, I ask that if you have questions you hold them until after the call and we’ll be happy to address them at that time. This call is being webcast and you can access the call over our website. You should have all received a copy of the release this morning. If you did not, you can access it on our website or call our corporate office for a copy. Finally, please remember that during the course of this 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 the forward-looking statements. Additional information concerning the factors that could 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 open this morning, we were very pleased to release our third quarter and our 9-month results. We reported an increase in revenue and increase in earnings per share and most important to us an increase in the same business unit revenue being generated from our 2 core businesses, our Financial Services and Employee Services groups. The third quarter was traditionally our most challenging quarter and these results were very satisfying to us and bode well for the future. I would like at this point to turn it over to Ware to walk you through the detail.

Thanks, Steve, and good morning, everyone. I want to take a few minutes to run through the highlights of the numbers we released earlier this morning for the quarter and for the 9 months ended September 30, 2012. As Steve commented, we are pleased to report total revenue up by 3.6% for the quarter, and up by 3.9% for the 9 months ended September 30. We announced 2 acquisitions in the third quarter, and we also announced 2 more transactions that were effective on October 1, after the third quarter. So this now totals 7 acquisitions that we have made to-date in 2012 and we continue to look at a pipeline of additional acquisition opportunities. The credit facility amendment that we announced in the third quarter gives us the flexibility to address additional opportunities that are currently in the pipeline. Thanks to the many CBIZ associates who are working hard to serve our clients every day, our business is performing in line with our expectations. We are pleased to report a $0.11 earnings per share for the third quarter this year, a 10% increase over the third quarter a year ago, and for the 9 months, earning per share is now $0.61 compared with $0.60 a year ago. Now we continue to show a positive trend in strengthening our same-unit revenue. Same-unit revenue increased by 0.8% in the third quarter, it was up 0.3% for the 9 months. Of course, these numbers are impacted by the continuing challenges in our Medical Management Professionals growth this year. So looking at core same-unit revenue without the impact of the MMP revenue decline, our same-unit revenue grew by 2% in the quarter and by 1.4% for the 9 months end in September 30, compared with a year-ago. Now looking more closely at same-unit…

Thank you, Ware, and I would like to take at this point the questions from our analysts and our shareholders.

[Operator Instructions] Gentlemen, our first question is from Jim Macdonald with First Analysis.

Yes, let’s start with how you see the environment these days, maybe particularly in the financial services area and particularly seeing also year-end type activity before potential tax law changes?

The environment I would categorize as stable and slightly improving. We believe that our clients are seriously thinking about investing and hiring coming into next year. We have not seen a robust demand at this point but our sense is of a slowly improving market for especially our financial services and in most of our employee services as well. So I think it appears to be a positive trend. There is so much uncertainty as to all of the government-related programs be at energy, EPA, tax, but what happens to the cliff that-- people are looking at it, but nobody is making specific plans, because there is nothing to plan on. So Jim, I would categorize it as probably more positive than we’ve seen before, but at a slow growth rate.

Okay. And just a specific for Q4 with your additional investments and infrastructure, is that going to lead to maybe a bigger or loss, or a bigger EPS impact in Q4?

No, we don’t think so Jim. I think we’ve seen improving top line growth, modestly at least throughout the year and it’s been steady. And we’re looking at a continuation of that end of the fourth quarter. So we’re looking for a fourth quarter that will be marginally better, we think at this stage than the fourth quarter a year ago. And I’ll just caveat that by saying particularly the third and fourth quarter tend to be a little lumpiness somewhat I’m predictable, but that’s our expectation today.

Okay. And let me ask one more and I’ll get back in queue. Can you talk maybe more specifically about the financial flexibility you have now at your bank line and how that works and kind of how much dry powder if you will, you have now?

Yes, and it’s all the matter of public record if you’ve cared to run through the documents. But long story short, the credit facility as they commonly do included some total leverage limitations vis-à-vis, the underlying EBITDA generated by the business. And the underlying EBITDA also includes the acquired EBITDA when and if we do new acquisitions. So it’s kind of the iterative moving process. But baked into the credit facility were some step-downs that normally occur with bank groups like this. And the step-downs were scheduled and had occurred earlier this year and what we did is we simply gain the flexibility to extend those step-downs and increased the leverage modestly. So it would open up a window for us to address some of the acquisitions if not all of the acquisitions quite frankly that are currently in the pipeline.

And Jim let me add to that, I think there were 2 points to consider. One is it reflected the confidence to bank group had in the company and that confidence was really based on the consistent and steady cash flow that they were comfortable with the fact that our leverage could stay up to where it was and not be ratchet it down based on the numbers if they saw.

Just a quickly follow-up on that, is there a number, a round number maybe of the kind of debt if you’re at $146 million now, what kind of debt you could incur?

Well, the reason I commented that is kind of an iterative process is because the newly acquired EBITDA then becomes part of the base calculation. So the terms and conditions of any newly acquired business impact the answer to your question. So it’s a really difficult number to give a specific answer to and I’m not trying to evade the question but just kind of explain the process. If I think the way to look at it Jim, is on the leverage basis. We are comfortable with the current leverage. We are probably not likely to see that leverage tick up on a sustainable basis going forward, although it could tick up seasonally. So as we look at it, we think we’ve got plenty of availability to do the transactions that may become available without dramatically increasing leverage. And quite frankly if the acquisitions perform as we expect over time actually contribute to deleveraging. All the bank amendment, is just give us the flexibility to aggressively look at what is probably the biggest list of potential acquisitions that we’ve looked at.

Maybe just asking in another way, I mean do you have any flexibility at all do to further repurchases?

Yes, we certainly do, but we have said on countless occasions that the best use of our cash and quite frankly this is our borrowing in this market is to concentrate on the acquisitions. So other than keeping the share count more or less flat at the current stock price, I don’t expect you will see any significant amount of share repurchases. But to answer your question, we have the flexibility to do. Johanna, do we have more questions?

At this time, there are no further questions in the queue.

Jim, would you like to jump back in?

Gentlemen, we just received a question from Josh Vogel with Sidoti and Company.

Sorry, I hopped on little late. My first question with the recent acquisition of the medical billing company, I didn’t know that was a still market that you were targeting deals and I was just curious, was it just a deal to get it to be true or you starting to see some firming demand there and that’s the market you want to start building out again?

Well, as Ware pointed out in his opening, we are seeing an improvement in the number of procedures that are up about 3% to 4% year-over-year. But problem we have faced in the medical practice business has been primarily related to the radiology business were the reimbursement cuts and the definition of what’s covered as dramatically reduced the revenue for procedure over the past 3 years. Our other 2 businesses there being emergency medical and anesthesia have actually performed reasonably well. The acquisition we made first was opportunistic. We had an opportunity to buy a fine well established firm in a market that we are already in and would help us bolster our anesthesia business. And it also lessened the overall impact on radiology. So from a portfolio standpoint, we are little bit less dependent on the radiology, which we believe we’ll continue to come under pressure going forward, and building up a business that we think is very stable. We were able to acquire good clients, good process and good technology. So it all worked to help the MMP business going into next year.

Okay. Now just from a broader standpoint, when you look at your portfolio of businesses and I want to focus more really on Financial and Employee Services here, which units do you think can outpaced GDP growth and which units you think would underperform, if we’re looking out to 2013 and we’re expecting low single-digit GDP growth?

Well, we’re not going to yet to give guidance on 2013. We’re just in the beginning of our budget process. But historically, our Financial Services business should outpace GDP by a point or 2 or more depending on where you are in the cycle and historically, our Employee Services group should also outperformed GDP. In the Employee Services group, you really have a collection of businesses. So as we commented in the opening, our P&C business is benefiting nicely from firming of pricing, which we haven’t seen in quite a number of years. Our payroll business is doing fine. Our retirement plan business is doing fine. Our human capital business is doing fine. We are seeing some falloff in the life insurance business, which will probably affect us little bit this year. And our employee benefits business has been a bit soft this year. But over time those are businesses that historically have both outperformed GDP.

Okay. Could you maybe give a little bit more detail, why you see weakness on the life insurance front?

That’s a very lumpy business for us. It tends to be populated by a lot of very big ticket transactions. And we’re just not seeing a lot of people. We have basically this same sales force. We don’t see a lot of people stepping up to do the large special kind of life insurance policies that we’ve seen before. I’m not sure that it related as much to either the election or the upcoming possible changes in tax laws, I think it’s almost episodic, in some points during the year we get very good business in some point. I don’t think there is a particular trend here.

Okay. And then just one more, Ware you were talking about investments in Financial Services to beef up some units there. Are you pretty much done on the hiring front?

Well, let me try to answer that. It’s not as much beefing up, where there is a deficiency. We had the opportunity to bring in a group of specialists to either augment businesses we already had, or to get us better position in some areas we wanted to be in, particularly the state local tax area and the property tax area. And those people are expected to bring with them over time based on their position in their industry some significant revenue. We will continue to look for and continue to add specialists and high profile accounting folks financial services folks as we can find them, but it’s not a question of kind of refilling holes for people we let go. These all represent real incremental revenue opportunities, and I think that the pace may slow up, because we geared up a business development business, which is probably 10 to12 people spread across the country, and that’s a good base, we’ll probably let that base work itself through before we add a lot more.

And gentlemen, our next question is from Jim Macdonald with First Analysis.

Yes, just a couple of follow ups, so I don’t have to try to make sure my calculations are right. Could you give us the legal fees and the share repurchases in the quarter?

Oh, boy, I will have to get back to you with that, Jim, I don’t have that off the top of my head.

Okay. And just one more on the MMP business. Is there any element or anniversary the sort of the competitive issues you have there, and maybe in conjunction with that is, are you seeing any issues relating to hospitals buying out physician practices and things like that?

I’m not sure I understand the first part. And the second part, we have seen a trend for some hospitals to buy out physician groups. It has not dramatically impacted us, we have lost a few small clients where that happen. That trend may or may not continue, it isn’t clear. I think the industry expects that there will be some impacts of it. But for the most part, it’s really not been major, we haven’t seen any significant major impact in our overall business.

And just to go back to, in the first part my question was I think a year-ago, you would lost some clients, maybe to competition or maybe otherwise and I was just wondering where you stood on in terms of being able to grow your client base?

Okay. I’m sorry I didn’t pick that up. Based on the backlog of new clients that have committed to us and are in some process of signing. I’m expecting that our full year 2012 new business will exceed loss business, and I think that was the trend we reported earlier on in the year. So I think the prior trend, which is really almost 2 years ago, where we lost more than we have gained is probably behind us. There is still significant uncertainty though in the market as to the impact of the Affordable Care Act, the impact of hospitals moving more into this business, the impact of Affordable Care Act organizations and the impact of staffing companies. So there is still a fair amount of uncertainty. But we are seeing I think for the first time, I would characterize our backlog of potential MMP customers as the largest backlog we’ve had in 4 years. Now that doesn’t mean we’ll sign them all, but they’re seems to be a movement. And we saw the signal this earlier on that as we get closer to the more complex government regulations that doctor groups maybe giving up their billing. So it’s too early again to declare victory, but the trend is looking better than it did year-ago.

And gentlemen, at this time, there are no further questions in the queue.

Thank you. Well, I thank you for the questions today, to our employees who are listening in, we had a good quarter. I appreciate your hard work. We now have to drive this strongly to the end of the year as we position for next year. But for the first time in a long time, we’re seeing more tailwinds than headwinds and so that’s good news. So I thank you for your efforts and look forward to talking to everybody after the release of our full year numbers.

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