Good morning, everyone and welcome to the CBIZ, Third Quarter and First Half 2016 Earnings Conference Call. All participants will be in 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.

Thank you, William. Good morning, everyone and thank you for dialing into the CBIZ third quarter and nine months 2016 results conference call. In connection with this call, today’s press release has been posted on the Investor Relations page of our Web site www.cbiz.com. This call is also being webcast and a link to the live webcast as well as a replay can also be found on our Web site. Before we begin our presentation, we would like to remind you that during the call, management may discuss certain non-GAAP financial measures. A reconciliation of non-GAAP financial measures to the most recently comparable GAAP measures can be found in the financial tables of today’s press release. Finally, remember that management may also make forward-looking statements. Such statements are based on current information and management’s expectations as of this date and do not guarantee future performance. Forward-looking statements involve certain risks, uncertainties, and a function that can be difficult to predict. Actual results can and sometimes do differ materially. A more detailed description of such risks and uncertainties can be found in the company’s filings with the Securities & Exchange Commission. Joining us for today’s call are Jerry Grisko, President and CEO; and Ware Grove, CFO. I will now turn the call over to Jerry Grisko for his opening remarks. Jerry?

Thank you, Lori, and good morning everyone. Our third quarter and nine months results were released this morning, and we are pleased to report continued strong growth in revenue, improved pre-tax margin and growth in earnings per share. Total revenue for the third quarter was up 6.8%, with acquired revenue contributing 5.8% and the remainder coming from same-unit revenue growth. Margin on pre-tax income from continuing operations improved by 40 basis points and earnings per share grew by 11.1% in the third quarter of this year compared with the prior year. For the nine months ended September 30, total revenue was $621 million up 6.6% from a year ago. Same-unit revenue was up 2.5% for the first nine months of this year and we improved margin on pre-tax income from continuing operations by 60 basis points. Earnings per share for the first nine months this year was $0.77, an increase of 13.2% over the $0.68% per share reported for the nine months a year ago. As we’ve discussed in prior calls, the seasonal nature of our tax and accounting work results in proportionally more revenue in the first half of the year compared with the second half. Given that seasonality, we’re pleased with the performance of the business in the third quarter and for the first nine months and expect that full-year results will generally be in line with the guidance on revenue and earnings per share that we previously provided. Now, turning to each of our practice groups, our Financial Services Group recorded another quarter of strong growth, both in revenue and in contributions earnings. Total revenue for the third quarter was up 5.4% , with same-unit revenue growing at 3.8% compared with the same period a year ago. For the nine months, total revenue grew by 5.1% compared…

Thank you, Jerry, and good morning everyone. During the first nine months this year, our acquisition spending was approximately $44.3 million, including earn-out payments on acquisitions made in prior years. For the remainder of 2016, we're estimating an additional payment of approximately $1.7 million for earn-outs. Looking ahead, we're estimating earn-out payments of approximately $11.8 million in 2017, $7.5 million in 2018, approximately $5.5 million in 2019, approximately $4,000 as estimated for the year of 2020 at this point. Capital spending for the first nine months this year was approximately $3.2 million and we expect full-year capital spending to be within a range of $4 million to $5 million for the full-year this year. Cash flow from operating activities has continued to be steady. Day sales outstanding on receivables stood at 86 days at September 30th this year, compared with 85 days a year ago. With our seasonal billing and collection cycle as is our typical seasonal pattern, we expect the day sales outstanding on receivables will lower to within a range of approximately 70 to 72 days by the end of the year. Bad debt expense as a percent of revenue stood at 53 basis points this year at September 30th, compared with 79 basis points a year ago and is lower this year due to the successful recovery of several previously recorded bad debts. At September 30th this year, the balance outstanding on our $400 million unsecured credit facility was $219.6 million. That means there is approximately $100 million of underutilized financing capacity currently and we have the flexibility to continue with our strategic acquisition program, and we have the flexibility to continue to address opportunities for share repurchases at the same time. Our priority for the use of capital continues to be focused on strategic acquisitions. But…

Thank you, Ware. I want to touch on just a couple of non-financial highlights for the quarter before we turn it over for questions. Many of the listeners on today's call participated in the analyst day that we held at the New York Stock Exchange on September 30. In addition to the high level overview of the company that we often provide in our investor meetings, participants had an opportunity to hear the heads of our financial services group and our employee services group provide a more detailed overview of the industries that we are in and our competitive position in those industries. We hope that the information was helpful in gaining an appreciation for our unique and differentiated position in the market and the value that brings to our clients. CBIZ also celebrated our 20th anniversary in August. Each of our offices participated in the celebration and together we contributed over 20,000 volunteer hours to our local not-for-profit organizations. We are also proud to announce that we will be donating $20,000 for the American Cancer Society as part of that celebration, both of which are reflection of our continued commitment to our core value of supporting the communities in which we live and work. At this point I would like to turn it back to you William for questions and answers.

Thank you, sir. We will now begin the question-and-answer session. [Operator Instructions] The first questioner today is Jim MacDonald from First Analysis. Please go ahead.

Yes, good morning, guys. I'm glad you didn’t get to the baseball related things in your other comments - but we are still live. On employer services, is there any predictable reason that you are having higher turnover of these reps is it tougher environment in general or anything else that might be causing this phenomenon?

No, Jim, it's Jerry. We will get to the baseball area by the way. But we looked at that issue Jim, it is really just a couple of people they happened to be higher performers left for a variety of reasons that including retirement and we are looking at this as really just point in time there is nothing that we see that appears to be a pattern or anything to be a concerned with, the person that runs that group has been on this issue and is very comfortable with reasons that people have left.

You give the same store sales for employer services this quarter and when you know when do you sort of anniversary kind of difficulty?

Yes. Hi, Jim, this is Ware. Actually we start lap our anniversary and some other stuff in the fourth quarter and certainly next year. This was largely kind of second half phenomenon last year and maybe ran into a debt this year in terms of kind of the timing of the retirements and turn over that impacted some of the revenue. The quarter, the employee services group was down 4.9% and for the year down 2.8% organically. So the acquisition activity has been pretty heavy in those areas. We are happy with the overall results with the underline organic is a bit week as Jerry commented earlier.

Okay and just one more or so on the government services side, is it fair to say that that’s still growing upper single digits or any major changes in growth rate there?

Hi Jim, this is Ware. Yeah, same store high single digits continued growth, that’s very sustainable for a period of time as we outlined during the analyst day, so no change in the trend there.

Great, thanks a lot.

[Operator Instructions] The next question comes from Joan Tong from Sidoti & Company. Please go ahead.

Good morning. I guess I just can add anything to the baseball comment unfortunately but so guys a couple of questions here first of all, the 1% organic growth obviously it is just a little bit disappointing if I look at your offering leverage just based on that 1% top line growth and total growth is 6% - 7%, it is still very descent pre-tax like year-over-year growth it is there and also we are seeing some nice expansion on the pre-tax margin. So if I were to look at sort of like over a longer period of time and over the next year, what are you really thinking about like maybe investment, hiring and just want to get a sense that hey, you know what we are seeing debt level of organic growth, how can we be able to see any offering leverage if there is any additional hiring or maybe capacity expansion, just wanted to get that sense of just thinking.

So thanks Joan, first of all I wanted to draw your attention to the fact that it is our numbers are seasonal right so when you see that 1% in the third quarter we have 2.5% so far for the nine months and again faster growth typically beginning of the year and then kind of slows a little bit into the latter part of the year, so that’s just one point of observation. The other thing getting specifically to your question and all fronts we are focused on organic growth. So you mentioned staffing as I mentioned in my comments if you looked at 2015, we actually had the client demand but our staffing was down a little bit we didn’t get all to work out the door certainly in the first half of the year. So we increased our staffing in 2016 compared to 2015 that helped us improve revenues in the first half but even more encouraging we are able to keep that staff busy kind of into that third quarter and we are very pleased with the amount of off season work that we are able to utilize there too. We will continue to look at our staffing levels to make sure that we are adequately staffed and continued to be active in the market as far as recruiting of talent and particularly laterals. The other things that we are focused on from an organic revenue growth perspective are particular areas of accelerated growth. So we are mentioned for example the government health care consulting business. We won some very nice contracts there; we continue to see nice growth in the states, 49 states that we represent. We are also expanding some of the work that we do at the Federal level so we are very encouraged by that and there are number of other areas where that need to be core businesses including the combination as I alluded to earlier of the payroll and the benefits and the technology what we call ESO on the employee benefit side we see nice trends there albeit early stage, we see nice growth in some of our special fee consulting areas and the core accounting side and we are also seeing nice growth and more growth in just general services that we are providing on the accounting side of the business. So overall, a quite positive and we are focused on those area opportunities.

Okay thank you for the color. And since you touch on the health consulting side of the business, so if I recall you, you had a recent deal with CMA like a $17 million, five year contract but you also mentioned that like just in general that particular business, Medicaid, Medicare has been quite strong and then some expansion scope of the business that you booked further in the near term. So I am just wondering like how do you - how we are going to see this particular business over the long term, you still you’re still pretty comfortable with that 10% growth here and also in terms of new business and can you just kind of pinpoint to like what are some of the additional like businesses that you actually spoke to recently?

Yeah, first I’ll answer your first question. Yes, we're reasonably comfortable that the growth that we've experienced over the past couple of years should continue into the foreseeable future. We have no reasons to believe that that won’t be the case. As far as the growth that we're seeing, we're seeing expansion of the services that we provide within the states that we represent on the on the Medicaid side. We're also seeing, as you mentioned, the large federal contract. We're seeing some opportunities in that space as well. They're coming in a number of different areas, but again we have people who are always cultivating those relationships and certainly working with the - both the federal and the state governments to understand our skill set, the services we can provide and we've seen very favorable opportunities coming out of those discussions.

Okay, okay. Got it. And finally, just on the cash flow obviously is very solid, free cash flow generation, and you need to continue to mention acquisition would be a priority. So, I just wonder how is the sales acquisition pipeline looking and in terms of evaluation and sizes of opportunity, different opportunities out there? Thank you.

The pipeline is consistent with what we've seen over the past couple of years. There are a couple of larger transactions in that pipeline although nothing larger than what we've historically done, but relative to some other transactions, there are some larger transactions. What I would tell you is their early stage there is a high mortality rate in those discussions. It's very hard to predict how many of those transactions will be completed and the timing of those transactions. But we are very comfortable with the pipeline that we have. Moreover, we are very focused on making sure that we're optimizing the sourcing of those transactions and the number of looks that we're getting and we're always improving in that area, including by contracting with some outside resources that can help us make sure that we're - we're getting a good number of looks. So, I think we've improved our acquisition process over the past year. We're focused on continuing to improve that process. It takes a little while for those improvements to take hold and actually show results. But we're encouraged by what we're seeing.

Okay. All right, thank you, guys.

Our next questioner today is Robert Kirkpatrick from Cardinal Capital Management. Please go ahead, sir.

Good morning. Could you please talk about the tone of your customers as they look to their businesses and the economy in the next six months or a year or something, especially given the uncertainty of the election, I'm curious as to that?

Yeah, Robert, we basically have the - the information we have is mostly anecdotal, but - but as I've commented before, I travel from office to office as does Ware and other members of the senior team. When we do that, we always sit across the table from the - the most senior client-facing professionals that we have in the office and that is generally the subject of discussion, which is what are we seeing in the market, what are we seeing from our clients, what is the level of optimism, and I will tell you that there is a higher level of optimism today than there certainly was a year ago or two years ago at this point. Early signs on GDP is that GDP will be up in the third quarter compared to the second quarter. There are a number of reports that measure specifically small middle market businesses. The trends are generally positive in that regard and I will share that the sentiment of small middle market businesses from all accounts on our front, so the conversations that we're having are generally more optimistic than oftentimes what you read about in the paper, because many of those concerns that we read about in the paper are specific to a particular sector like energy or they have international exposure et cetera. Our clients at these small middle market businesses predominantly focus on the overall climate in their local towns, in their states, and in their business environments and again I would share that that is generally more optimistic than again it's been a year or two ago. On top of that, the evidence that we have is that we have seen a larger number of RFPs and that we've actually won a nice number of sizable engagements for offseason work, which is a pretty good indicator for us.

Great, thank you so much.

[Operator Instructions] It looks like we have no further questioners. So, this will conclude our question-and-answer session. I would like to turn the call back over to Jerry Grisko for any closing remarks.

Okay. Thank you, William. For the members who are listening on today's call, I want to congratulate you on another strong quarter and thank you for all that you do to contribute to our success. I would also like to thank our shareholders and analysts, as well as our over 4400 team members and 90,000 clients for your continued support of our company. Thank you and have a nice day.

The conference has now concluded. Thank you all for attending today's presentation. You may now disconnect your lines.