Good morning, and welcome to the CBIZ First Quarter 2016 Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Lori Novickis, Director of Corporate Relations. Please go ahead ma’am.

Thank you, Dan and good morning everyone and thank you for dialing in to the CBIZ first quarter 2016 results conference call. Before our management team begins their presentation, we would like to remind you of a few items. As with all of our conference calls, this call is intended to answer the questions of shareholders and our analysts. If there are media representatives on the call, you’re welcome to listen in. However, we ask that if you do have questions that you please hold them for after the call and we’ll be happy to address your questions then. This call is also being webcast. You can access the live webcast, as well as the replay on our website at www.cbiz.com. You should have all received a copy of the press release that was issued earlier this morning, if you haven't, it can also be found on our website. Finally, remember that during the course of the call, management 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 factors that could cause actual results to differ materially from those in forward-looking statements is contained in our SEC filings, Form 10-K and press releases. Joining us for today’s call are Jerry Grisko, President and Chief Executive Officer, and Ware Grove, Chief Financial Officer. I will now turn the call over to Jerry Grisko for his opening remarks. Jerry?

Thank you Lori, I’d like to begin by thanking our team members for all that they did to contribute to a very strong first quarter. As reflected in this morning's release, total revenue increased by 4.8% compared to the first quarter of 2015. The results are even better when we consider the January of this year; we sold our Wichita office which contributed $1 million in revenue to the first quarter of 2015. Excluding that contribution to revenue from Wichita, our adjusted revenue for the first quarter of 2016 grew 5.4% over the same period a year ago. We are also pleased to record a 3.7% increase in organic revenue growth, a 60 basis point improvement in margin and 11.8% increase in income from continuing operations compared with the year ago. Fully diluted earnings per share were $0.41 for the first quarter this year compared with $0.38 reported for the same period a year ago, an increase in EPS of 7.9%. Turning to the performance of the practice groups, total revenue for the financial services group was up 6.6% in the first quarter compared with the year ago. Of which 5.9% is same unit organic revenue growth. This is after adjusting for the sale of the Wichita office. The increase within our financial services group is a product of strong performance in both our core counting offices and our government healthcare consulting business. If you may recall the first quarter of 2015 was negatively impacted by weather-related office closings and a shortage of staff during the seasonally very busy time of year for us. The weather-related condition did not occur in 2016 and as a result of investments that we made in our recruiting staff, the headcount in our core accounting office improved by approximately 2% over the same period…

Thank you Jerry, and good morning everyone. During the first quarter, we announced the acquisition of Millimaki, a $2.4 million accounting firm that is being integrated into our existing San Diego location. In total, during the first quarter, we used $3.5 million for acquisitions and acquisition-related payments for earnouts on prior year acquisitions. At March 31, 2016 future earnout payments for prior year acquisitions are planned at approximately $5.2 million for the balance of this year 2016 and approximately $8.1 million in 2017, $3.9 million in 2018, $1.3 million in 2019 and then $400,000 in the next year 2020. During the first quarter we also used approximately $6.1 million to repurchase 632,000 shares of our common stock and we repurchased an additional 22,000 shares under a 10b5-1 program since the end of the quarter. We continue to assess the potential for share repurchases and as we have in the past, we will continue to be opportunistic in our approach with the goal to maintain a relatively constant share count in the range of approximately 15 million shares. As I commented in our fourth quarter 2015 earnings call earlier this year, we expect that our fully diluted weighted average share count for the full year 2016 will be approximately 53 million to 53.5 million shares. Now I recognize that the share count in the first quarter here is slightly lower than that, but we expect activity for the balance of the year to cause an increase of another 0.5 million or so shares as we go through the year. As a reminder, we typically experience a seasonal use of cash during the first quarter as receivables built up that are converted to cash later in the year. The borrowing level on our $400 million unsecured credit facility increased by $28.3 million…

Okay, thank you, Ware. I want to take just a few minutes to comment on our recent acquisition activity before we turn it over for questions. Over the past two years, we made four strategic acquisitions of retirement plan, actuarial consulting and administrative firms. As Ware mentioned, our most recent acquisition in this area was announced on April 1 with the acquisition of The Savitz Organization, a $20 million firm with 110 employees located in Philadelphia. In addition, in the fourth quarter of 2015, we also announced the acquisition of Pension Resource Group, a $4.8 million firm with 35 employees located in Atlanta and The Cottonwood Group, a $3.1 million firm with 15 employees located in Overland Park, Kansas. And as you may recall, in June of 2014, we also announced the acquisition of the Tegrit Group, an $8.5 million firm with 77 employees located in the Cleveland area. The combination of these acquisitions allows us to serve virtually every need of pension plan sponsor with assets exclusively within the US. Moreover, the addition of these actuarial firms on top of the strong retirement advisory business that we already have provide CBIZ with approximately $75 million in revenue from this group and allows us to serve the full range of retirement plan needs of our clients, including retirement plan actuarial consulting, administrative services and investment advisory services. In addition to the recent acquisitions of the actuarial firms, in January of this year, we also announced the acquisition of Millimaki Eggert, a $2.4 million very highly regarded accounting firm located in San Diego. That firm enhances the scope and level of service offerings we are able to provide to our existing clients in that market. The strong platform that we now have in the retirement plan service business created by the series of transactions that I mentioned earlier and the addition of the accounting firm on San Diego to bolster our existing very strong presence in that market are examples of the consistent progress we have made in our acquisition program. As Ware mentioned, we continue to have a very active pipeline of acquisition prospects that we’re cultivating. However, as is always the case, it is difficult to predict when and if a particular transaction might close, but including the two transactions that we have closed so far this year, we anticipate closing a total of 4 to 6 [ph] acquisitions in 2016. So to wrap up, as we indicated, we are very pleased with our results for the first quarter and we remain optimistic about our ability to achieve our revenue growth goals, our margin improvement goals and the increase in earnings per share that we have set for ourselves in 2016. So with those comments, let me conclude and we can now open the call for questions.

[Operator Instructions] And our first question today comes from Jim MacDonald of First Analysis. Please go ahead.

Good morning, guys and welcome Jerry. Good to hear you on the call.

Thanks, Jim, good to hear from you as well.

I want to dive into the accounting performance, which seem to be better this quarter. Can you talk about – you talked a little bit about how you have 2% more produce, can you talk more about volume and pricing and whether we are back in a growth pattern there now?

Yes, we think so, Jim, and all signs seem to indicate that. I think the most encouraging signal that we received is that within our large offices, the vast majority of them were up year-over-year. We are also receiving word from those offices that there is good demand for client services and the pipeline they think will remain strong throughout the year. So it seems to be in a good trend.

Any thoughts on pricing or volume?

Yes, so as we talked about in the past, we really measure yield which is a combination of pricing and efficiency and we have seen that yield continue to tick up over the past several years. Year-over-year, we held constant from 2016 compared to 2015 and again that’s a combination of both price and efficiency. We will get a better feel for price as the year continues.

Okay. Thanks for your detail on retirement business and acquisitions. I think the last quarter, you also talked about potentially acquiring in a new area, can you – is that still a possibility and any more thoughts on that?

Yes, I would have to go back Jim and reference what you’re referring to. Here is what I would say. There are – we just completed our strategic planning process. There are a number of high growth opportunities for us. As I indicated, it’s difficult to predict when or if we are able to get deals done in those areas. But we are pursuing a number of verticals that have higher revenue growth, higher margins and can really support the businesses wherein and support our clients. So we are actively as we always area actively pursuing those acquisitions.

Yes, Jim, this is Ware. Just let me add. There is no real fundamental shift in our strategy of accounting and government healthcare consulting and then the suite of employee services that we currently bring to the table. There are niches within those businesses that Jerry is actively pursuing with our acquisition program and so that’s what we are referring to. It’s not really a fundamental shift so much as it is maybe a more specific target towards specific niches.

Okay. And just one more, I missed the – I think you gave a number for your benefits business being up and I missed that number, that’s a big part of your business, any other color you can give about that side of the business?

No. Other than -- we’re very encouraged by the activity that we’re seeing there. There is really two opportunities. First is just the general employee benefits business that we’ve enjoyed for a long time. The second thing is kind of a shift in the market that’s beginning with a conversion of payroll and benefits in technology. We have all those pieces and we are beginning to put them together and approach the market in a way that capitalizes on those opportunities. Our limited exposure there tells us that when we approach the market in that fashion, we’re able to attract a higher, a larger client, we have higher retention rates, all the indicators are positive. So I think there is nothing, but really positive signals for that side of the business.

[Operator Instructions] Our next question comes from Steve McManus of Sidoti & Company. Please go ahead.

Hey, guys and thanks for taking my questions. So first one, I kind of wanted to get a feel for how big the government healthcare business was, how big of a role it played during the quarter, and also if there is any seasonality to be aware of there with respect to that part of the business?

So the growth in that business was approaching 11%, around 11% in the first quarter. What we would expect for that business through the remainder of the year is kind of high single digits. There is not really seasonality in that business, although it is impacted from time to time on large projects that we’re engaged to help our clients with. So we may have seen some of that in the first quarter, which kind of accelerated that growth beyond the high single digits that we’ve experienced and we would expect to experience for this year.

Okay. Great. And then I just kind of wanted to clarify, I’m not sure if you broke this out, but for the full year 2016 guidance, is there a same unit growth estimate baked in to that?

I don’t recall what we signaled. Obviously the total growth is 6% to 8%. That includes acquisitions within that -- embedded within that, we would expect our organic growth to be in the 3% to 3.5% range.

Okay. And then interest expense really ticked down during the quarter, is that a kind of a fair run rate to expect moving forward?

Yeah. Hi, Steve. This is Ware. Yeah. It may be a little higher than that. I think at $1.5 million plus change, it represents kind of the first quarter, which starts at a low point and then starts to ramp up. So if the run rate may be somewhere between $1.5 million and probably less than $2 million a quarter, but as I commented earlier, it depends on the timing and size of acquisitions and any opportunities to repurchase shares. But maybe tick it up a little bit in future quarter from the first quarter run rate.

Okay. And then just taking a look at the debt levels which you guys touched on, obviously you picked up a bit also just due to that, I believe the conversion premium, but I mean are you guys comfortable with the leverage now or do you plan on paying some of that down over the next few quarters, how are you guys looking at that?

Well, we’re not uncomfortable with a 2.5 time leverage. If we don’t do acquisitions or share repurchases, of course we liquidate that debt and de-lever pretty quickly because of the strong underlying cash flow. But it’s also because of that strong consistent underlying cash flow, that we’re not uncomfortable to carry 2.5 times and it’s a fairly low cost of capital for us right now. We have a very, very supportive bank group and so as we have acquisition opportunities, we fully intend to use the bank line within that 2.5 to 3.5 range or below and we’re not uncomfortable with that.

Okay. And then last one, you mentioned a few of the things kind of impacting the employee service division and obviously the margins fell off a bit during the quarter, how should we look at that moving forward, is there anything kind of in place to improve margins next quarters, any commentary there would be great?

Steve, this is Ware. Some of it’s simply timing and Jerry outlined some of the non-recurring things where we -- it was a revenue issue more than it was a cost issue in some cases. In other cases, because of the investments we’ve made in new producers and wellness programs and the like, we’re investing in the business. I think you might see a small improvement in the margin as we go through the year and we’re not really projecting a decline full year year-over-year. So I think it was largely a timing issue in the first quarter.

Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Okay. Thank you, Dan and thank you all for your questions and for participating on today’s call. We are very pleased with our first quarter results and our continued progress as CBIZ is well positioned for even greater growth in the future. I’d like to thank our shareholders and analysts as well as our 4400 team members and more than 90000 clients for your continued support and dedication to the company. Thank you everyone and have a great day.

Ladies and gentlemen, the conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.